Kenya’s Short Term T-Bills Undersubscribed on Tight Liquidity

Treasury bills auctioned on Thursday last week was characterized by a low demand that finally resulted into under subscriptions with the overall subscription rate coming in at 79.9 percent, compared to 124.4 per cent recorded the previous week attributed to tight liquidity in the market.

“This can be seen by the increase in the average interbank rate to 6.1 percent from 5.3 percent recorded the previous week,” said Cytonn Investments.

The subscription rates for the 91, 182 and 364-day papers came in at 42.4 percent, 99.4 percent, and 75.4 percent compared to 125.8 percent, 141.8 percent, and 106.6 percent, respectively, the previous week.

The yield on the 91-day paper remained unchanged at 8.0 percent while yields on the 182 and 364-day papers declined to 10.6 percent and 11.1 percent, from 10.7 percent, and 11.2 percent, respectively, the previous week.

Genghis Capital Analysts further said, “We hold the view the primary bond issue also led to the subdued secondary market turnover.”

According to Genghis, secondary market turnover declined 46.02 percent w/w in the week to record KES 5.24Bn. The trades were spread out across the yield curve with the top five traded bonds accounting for 63.23 percent of total activity.

The overall acceptance rate remained relatively unchanged at 84.9 percent compared to 85.0 percent the previous week, with the government accepting a total of Kshs 16.3 bn of the Kshs 19.2 bn worth of bids received, against the Kshs 24.0 bn on offer.

The average interbank rate rose to 6.1 percent from 5.3 percent recorded the previous week, while the average volumes traded in the interbank market decreased by 29.7 percent  to Kshs 11.5 bn from Kshs 16.3 bn the previous week.

TheCBK intervened with KES 10Bn reverse repo and received KES 6.10Bn at an average 10.00 percent. The new CRR cycle begun in the terrain of the week.

The Kenyan Government has issued a 15-year amortized Infrastructure Bond (IFB 1/2018/15), with an effective tenor of 13.0 years, and a coupon of 12.5 percent, in a bid to raise Kshs 40.0 bn to fund infrastructure projects in the current fiscal year.