Higher returns on the Central Bank of Kenya’s (CBK) T-bills during the week saw increased subscriptions with investors opting for the 182-day, 364-day papers compared the 91 day papers. Subscription rates for the 91, 182 and 364-day papers 8.284 percent, 10.329 percent and 10.895 percent respectively compared to last week’s 83.7 percent, 120.4 percent and 95.2 percent. Higher returns on the 182-day saw CBK sell Ksh 10.06 billion against a target of Ksh 10 billion. Compared to Ksh 2.31 billion worth of 91-day T-bills against a target of Ksh 4 billion, and Ksh 5.17 billion of 364-day T-bills against a target of Ksh 10 billion. Cytonn Investments Analysts note that,”The average subscription rate for the month of June stands at 156.4 percent, which is higher than the year to date monthly average of 148.8 percent.” The lower yield on the 91-day paper is mainly attributed to the low interest rates environment we have been experiencing, given the high liquidity in the money markets. Cytonn says the the government is expected to meet its domestic borrowing target for the 2017/18 fiscal year, as reduced credit to private sector following the capping of interest rates will make it easier for government to meet its domestic borrowing target, as institutions channel funds more actively towards government securities, and to meet its foreign borrowing target in the 2017/18 fiscal year, with budget estimates projected to decline from Kshs 462.3 bn to Kshs 206.0 bn, which is the amount that the government has collected so far in the foreign market for this fiscal year.
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