In the first treasury bill auction of September, the Central bank has collected a paltry Ksh10.9 billion against the targeted Ksh24 billion. The bills were undersubscribed registering a performance rate of 49.57 percent slightly lower than last week’s 52.33 percent performance rate.

In the current auction, the 91 days bills sought Ksh4 billion receiving bids worth Ksh2.73 billion representing a 68.47 percent performance rate. CBK accepted 2.25 billion at an average interest rate of 6.295 percent.

The 182 days bills sought Ksh10 billion receiving bids worth Ksh3.16 billion representing a 31.62 percent performance rate. CBK accepted 2.68 billion at an average interest rate of 6.63 percent.

The 364 days bills sought Ksh10 billion receiving bids worth 5.995 billion representing a 59.95 percent performance rate. CBK accepted 5.995 billion at an average interest rate 7.55 percent.

There has been reduced investor appetite for government bills in recent weeks as investors move their cash to long-term securities. Since August, CBK has floated three bonds; 20-year bond seeking Ksh40 billion, 11-year amortized infrastructure bond seeking Ksh70 billion, and 15-year and 20-year bonds seeking Ksh50 billion.

The migration to long term bonds probably explains the reduced interest in short term bills which take a year or less to mature.