T-Bills Undersubscribed During the Week As Government Raises Ksh 21Bn in Bonds

During the week, T-bills were undersubscribed, with the overall subscription rate dropping to 73.7 percent from 79.5 percent recorded the previous week due to investors shifting their interest towards the two re-opened bonds, FXD 1/2008/15 and FXD 1/2017/10, the whose combined performance came in at 73.0 percent.

The subscription rates for the 91, 182 and 364-day papers came in at 36.7, 77.8, and 84.3 percent compared to 125.5, 64.2, and 76.4 percent respectively the previous week.

Yields on the 91, 182 and 364-day papers remained unchanged at 8.0, 10.5 and 11.1 percent respectively. The overall acceptance rate came in at 82.3 percent compared to 94.9 percent the previous week with the government accepting a total of 14.6 billion of the 17.7 billion worth of bids received against the 24.0 billion on offer.

The government is still behind its domestic borrowing target for the current fiscal year, having borrowed 75.4 billion shillings against a target of 189.3 billion shillings

Last week, the Kenyan Government re-opened two bonds, a 15-year (FXD 1/2008/15) and a 10-year (FXD 1/2017/10) with effective tenors of 5.3 years and 9.6 years and coupons of 12.5 percent and 13.0 percent respectively in a bid to raise a total of 30.0 billion shillings for budgetary support.

The weighted average accepted yields on the bonds came in at 12.6 percent and 13.1 percent compared to the market-weighted average yield of 12.7 percent and 13.2 percent respectively.

Despite being undersubscribed with a subscription rate of 73.0 percent with 21.9 billion shillings bids received compared to 30.0 billion shillings on offer, the low acceptance rate of 45.9 percent (Kshs 10.0 bn was accepted compared to Kshs 21.9 billion received) is an indication that the government is not accepting expensive money despite remaining behind target in its borrowing.