Kenya's Treasury bond auction on Wednesday attracted bids worth Ksh31.96 billion ($365.4 million), with most investors opting to go for the shorter term two year bond.

The banking regulator was seeking Ksh20 billion ($228.6 million) through the sale of two and 10-year treasury bonds in the issue that was oversubscribed by 59.82 per cent.

The two year bonds, whose return was determined by how investors who participated in the auction and what the Central Bank of Kenya (CBK) was seeking, will pay interest at a 12.939 per cent annual rate every six months and investors will not get a discount.

The 10-year reopened bonds on the other hand, are paying interest at a 12.371 per cent annual rate every six months and investors will be required to pay the banking regulator Ksh99,961 ($1,143.90) for every Ksh100,000 ($1,143.40).

CBK received bids worth Ksh22.24 billion ($254.3 million) for the two year bonds but accepted bids worth Ksh17.92 billion ($204.9 million), most of which were competitive bids, only received bids worth Ksh9.71 billion ($111.1 million) for the 10-year bonds but only accepted bids worth Ksh526.6 million ($6.02 million).

The bond auction closed a day after a debt sale by Jamii Bora Bank which was also in the market seeking Ksh1 billion ($11.4 million) through the sale of a five year bond that is paying interest at a fixed 13.3 per year and comes with an option of an early redemption after 3 years.

Jamii Bora Bank which is one of the smallest banks in the country was issuing its debt to sophisticated investors.

The yield on 182-day Treasury bills whose issue was oversubscribed rose to 10.816 per cent, a continuation of the upward trend that started in the third week of June when it touched a low of 5.11 per cent.

Likewise, the yield on 364-day Treasury bills whose issue was also oversubscribed rose to 13.97 per cent also continuing the upward trend from a low of 8.141 in the second week of June.