During the week, T-bills were undersubscribed, with the overall subscription rate coming in at 46.7 percent, compared to 42.7 percent recorded the previous week, due to relatively tight liquidity in the money market.
According to Cytonn Investments Limited weekly report, the tight liquidity was due to heavy reverse repo maturities and transfer from banks – taxes that came in at 19.9 billion and 17.4 billion shillings respectively.
The subscription rates for the 91, 182 and 364-day papers came in at 41.8, 45.9, and 49.5 percent respectively compared to 63.4, 43.6 and 33.7 percent respectively the previous week.
Yields on the 91, 182 and 364-day papers remained unchanged at 8.1, 10.3 and 11.0 respectively with the overall acceptance rate coming in at 97.6 percent compared to 95.5 percent the previous week.
The government accepted a total of 10.9 billion shillings of the 11.2 billion shillings worth of bids received, against the 24.0 billion shillings on offer in this auction.
Despite this, the government is still behind its domestic borrowing target for the current fiscal year, having borrowed 68.5 billion shillings, against a target of 126.2 billion shillings.
Liquidity in the money market remained relatively tight during the week despite a net liquidity injection of 12.0 billion shillings compared to a net injection of 0.3 billion shillings the previous week.
A significant amount of the liquidity injection came from Reverse Repo Purchases of 17.9 billion shillings as the CBK looked to counter the high liquidity reductions brought about by Reverse Repo Maturities and Transfer from Banks – Taxes, of 19.9 billion shillings and 17.4 billion shillings respectively.
The average interbank rate declined to 6.8 percent from 8.0 percent recorded the previous week, with the average volumes traded in the interbank market decreasing by 14.9 percent to 26.1 billion shillings from 30.7 billion shillings the previous week. This week, the banks’ holding of excess liquidity was below the 5.25 percent requirement by 1.5 billion shillings.