T-bills subscriptions remained high but declined during the week to 141.9 percent compared to 172.5 percent recorded the previous week according to the weekly Cytonn Investments report.
The subscription rates declined across the board with the 91, 182 and 364-day papers receiving subscriptions of 129.3, 150.7 and 138.2 percent respectively compared to 221.2, 168.2 and 157.5 percent respectively the previous week.
Yields on the 182 and 364-day papers remained unchanged at 10.4 and 10.9 percent respectively while that of the 91-day paper declined by 10 bps to 8.6 percent from 8.7 percent the previous week.
The accepted yields on all three papers came in at the same rate as the weighted average market yields, with the overall acceptance rate was at 82.6 percent compared to 78.5 percent the previous week.
Bank’s holdings in government papers have increased to 55.0 percent of total debt equivalent to 1.1 trillion shillings from 51.1 percent equivalent to 1.0 trillion shillings at the beginning of the year as investing with the Government offers a better risk-return proposition for the banks given the capping of interest rates. The increase is equivalent to 23.3 percent on an annualized basis, indicating that banks find it better to lend to the government than to the private sector due to the interest rate cap.
The market liquidity increased as can be seen by the decline in the average interbank rate, which closed the week at 5.0 percent compared to 5.6 percent recorded the previous week.
During the week, there was a net liquidity injection of 8.4 billion shillings compared to a 25.7 billion shillings withdrawal the previous week. The net liquidity injection was due to T-bond redemptions and government payments amounting to 36.1 billion shillings and 25.9 billion shillings respectively. In a bid to mop up excess liquidity from the market, the Central Bank was in the repo market and managed to clear 15.8 billion shillings in repos.