Treasury bills were oversubscribed last week. The overall subscription rate came in at 139.9 percent compared to 155.0 percent recorded the previous week according to this week’s Cytonn Report.
The subscription rates for the 91, 182 and 364-day papers came in at 63.8, 114.2, and 196.0 percent compared to 96.1, 149.7, and 183.8 percent respectively the previous week.
Yields on the 91, 182 and 364-day T-bills remained unchanged at 8.0, 10.4, and 11.1 percent respectively.
The overall acceptance rate decreased to 86.2 percent compared to 87.8 percent the previous week with the government accepting a total of 28.9 billion shillings of the 33.6 billion shillings worth of bids received against the 24.0 billion shillings on offer.
The government is currently 4.6 percent ahead of its domestic borrowing target for the current fiscal year, having borrowed 221.4 billion shillings against a target of 211.8 billion.
The Kenyan Government issued two new bonds, a 5-year (FXD 1/2018/5) and a 20-year (FXD 1/2018/20) with the 5-year coupon to be market-determined and the 20-year coupon set at 13.2 percent.
The government will be seeking to raise 40.0 billion shillings for budgetary support. With:
- The government is 4.6 percent ahead of its pro-rated domestic borrowing target and having collected 69.9 percent of its foreign borrowing target
- KRA having collected 91.2 percent of its half-year 2017/18 target
- The Treasury working on a Supplementary Budget that will see the reduction of expenditure as development expenditure budget absorption remains below 80.0 percent,
Economic analysts at Cytonn expect the interest rate environment to remain relatively stable for the rest of the fiscal year.
Treasury bonds with the same tenures to maturity are currently trading at a yield of 12.4 percent and 13.3 percent in the secondary market, for 5-years and 20-years, respectively, and as such we see the average yield of the bonds coming in between 12.4 percent and 12.6 percent for the FXD 1/2018/5 and between 13.2 percent and 13.4 percent for the FXD 1/2018/20.