According to the Central Bank of Kenya’s (CBK) weekly bulletin, investors are actively buying up short-term government paper (treasury Bills) to cash in on high yields before interest rates begin to fall.

A treasury bill is a short term debt obligation issued by the government. In Kenya there are three types:  the 91 day T-Bill, the 182 day T-Bill and the 364 day T-Bill. They are issued through a competitive bidding process at a discount from par, which means that they do not pay fixed interest payments like conventional bonds but rather the appreciation of the bill provides the return to the holder. For example, for every 95 shillings you invest you receive 100 shillings upon expiry of the Bill’s term.

The CBK weekly auction of Treasury Bills saw investors bid aggressively for the 182-day and the 364-day government securities with the 91-day one attracting only 44.3% subscription. The weighted average interest rates on the 91-day Treasury bill was observed to decline by 0.388% to stand at 16.340%, the one on the 182-day declined by 0. 70% to stand at 16.960% while the rate on the 364-day Treasury bill declined by 0.12% to stand at 16.915%.