T-Bills Undersubscribed For the Fourth Week Running

During the week, T-bills were undersubscribed for the fourth week running with overall subscription coming in at 82.5 percent compared to 74.9 percent recorded the previous week according to the weekly report released by Cytonn Investments.

Liquidity remained tight in the market and saw the Central Bank of Kenya (CBK), in a bid to ease the liquidity situation in the market, participate in the reverse repo market, injecting 8.9 billion shillings during the week.

The participation in the Treasury Bills market remained low, but the acceptance rate improved to 97.3 percent compared to 52.7 percent the previous week, an indication that investors pricing was within the government’s acceptable boundaries.

Subscription rates on the 91, 182 and 364-day papers came in at 123.3, 93.1 and 44.6 percent respectively from 86.2, 93.7 and 48.7 respectively the previous week. Yields on the 91-day T-bill increased by 10 bps to 8.7 percent from 8.6 percent from the previous week while yields on the 182-day and 364-day T-bills remained unchanged during the week, closing at 10.5 percent and 11.0 percent respectively.

The CBK Weekly Report revealed that the interbank rate increased by 80 bps to 8.3 percent from 7.5 percent registered the previous week a reflection of the skewed liquidity distribution in the money market towards larger banks.

The volumes transacted in the interbank market declined significantly to 12.7 billion shillings from 23.1 billion shillings transacted the previous week. The net liquidity injection of 13.1 billion shillings was driven by government payments of 19.1 billion shillings, T-bill redemptions of 12.4 billion shillings and Reverse Repo purchases of 8.9 billion shillings offsetting tax remittances by banks of 11.4 billion shillings, Reverse Repo maturities of 9.6 billion shillings and T-bill issuances of 6.3 billion shillings.