During the week, T-bill auctions were oversubscribed for the third week running, with overall subscription coming in at 182.5 percent, compared to 174.5 percent recorded the previous week according to a report released by Cytonn Investments.
According to the report, the subscription rates for the 91, 182 and 364-day papers came in at 37.8, 300.4 and 161.1 percent respectively compared to 44.0, 298.6 and 137.4 percent the previous week, respectively.
The 91-day paper continues to witness undersubscription as investor preference is more skewed towards the 182 and 364-day papers which continue to offer investors higher returns on a risk-adjusted basis, says the report.
Yields on the 91, 182 and 364-day T-bills remained relatively unchanged during the week, closing at 8.6, 10.5 and 10.9 percent respectively from 8.7, 10.5 and 10.9 percent respectively the previous week.
The Central Bank (CBK) has remained disciplined in stabilizing interest rates in the auction market by rejecting bids that CBK considers as above the market, and the market has responded to this with the current overall bids received acceptance rate of 90.7 percent compared to 71.6 percent at the beginning of the year.
The liquidity in the money market was relatively stable with a slight reduction in the overall liquidity position by 3.8 billion shillings and this led to the average interbank rate remaining stable at 6.8 percent whereas the volumes transacted decreased to 10.4 billion shillings from 16.5 billion shillings transacted the previous week.
There was a decline in government payments and T-bill redemptions, which came in at 21.8 billion shillings and 20.6 billion shillings from 9.7 billion shillings and 23.7 billion shillings respectively the previous week.
There was also a decrease in Term Auction Deposit placements by commercial banks, which came in at 19.3 billion shillings from 40.2 billion shillings the previous week.