Treasury Bills Subscriptions Increased in the Previous Week- Cytonn Report

By Soko Directory Team / Published May 30, 2016 | 8:23 am

During the week, Treasury bills subscriptions increased to 230.3 percent from 145.1 percent the previous week with subscriptions for the 91-day, 182-day and 364-day increasing to 255.3 percent, 175.7 percent and 268.2 percent, from 182.5 percent, 141.2 percent and 124.4 percent, respectively.

Investors seem indifferent among the three tenors, indicating that the rates are expected to stabilize at the current levels and the pricing is fair on a risk adjusted basis. The yields declined marginally this week with rates declining to 7.7 percent, 10.0 percent and 11.3 percent for the 91, 182 and 364 day T-bills, respectively, compared to 8.0 percent, 10.1 percent and 11.6 percent, the previous week.

The 91-day T-bill is currently trading below its 5-year average of 10.5 percent, having witnessed significant stability in the last two months. The Central Bank of Kenya (CBK) is keen on interest rates reduction supported by the monetary policy stance of lowering the CBR by 100 bps to 10.5 percent.

However, despite the reduction in CBR, we expect the rates to bottom out at the current levels as we close out on the current fiscal year.

Based on the Central Bank weekly report, the interbank rate increased by 76 bps to 4.3 percent from 3.6 percent the previous week on the back of a net liquidity reduction of Kshs 7.8 bn in the money markets.

Article by Vera Shawiza.

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