T-Bill Subscriptions Close the Month of May on a High Note

The T-bills subscription rates remained high and increased in May to 168.9 percent from 131.8 percent in April due to the high liquidity in the market.

The subscription rates for the 91 and 364-day papers during the month came in at 230.8 percent and 128.3 percent from 125.1 percent and 138.6 percent the previous month respectively.

The yield on the 91-day paper decreased to 8.5 percent from 8.8 percent in April whereas that of the 364-day paper remained unchanged at 10.9 percent.

The 182-day paper was floated back into the auction market after an 8-week absence with the yield on the paper declining to 10.4 percent from 10.5 percent in March while subscription rate for the paper came in at 184.8 percent from 403.0 percent in March.

During last week, T-bills subscriptions remained high, increasing to 157.5 percent compared to 141.9 percent recorded the previous week with the subscription rates on the 91, 182 and 364-day papers coming in at 209.2, 155.0 and 139.3 percent compared to 129.3, 150.7 and 138.2 the previous week respectively.

The yield on the 91-day paper declined by 10 bps w/w to 8.5 percent from 8.6 percent the previous week whereas yields on the 182 and 364-day papers remained unchanged to close at 10.4 percent and 10.9 percent respectively.

The 91-day T-bill is currently trading below its 5-year average of 9.4 percent. The lower yield on the 91-day paper is mainly attributed to the low interest rates environment the country been experiencing, given:

• the government is ahead of its domestic borrowing target for the current fiscal year, having borrowed 385.0 billion shillings against a target of 271.9 billion shillings (assuming a pro-rated borrowing throughout the financial year of 294.6 billion shillings budgeted for the full financial year)
• the high liquidity in the money markets.

See the image below:

This is according to Cytonn Investments Report