T-Bills Oversubscribed as Government Stays Ahead of its Domestic Borrowing

Last week, T-bills were oversubscribed, with the subscription rate coming in at 106.1 percent down from 162.5 percent the previous week.

The subscription rates for the 91, 182 and 364-day papers came in at 26.8, 115.6, and 128.4 percent compared to 129.3, 179.5, and 158.6 respectively the previous week.

Yields on the 91, 182 and 364-day papers remained unchanged at 8.0, 10.3 and 11.1 percent, respectively.

The acceptance rate for T-bills declined to 76.7 percent from 81.4 percent, the previous week, with the government accepting a total of 19.5 billion shillings of the 25.5 billion shillings worth of bids received against the 24.0 billion shillings on offer.

The government is currently 28.5 percent ahead of its domestic borrowing target for the current fiscal year, having borrowed 316.3 billion shillings, against a target of 246.1 billion shillings.

Last week, the Kenyan Government issued 2 bonds, FXD 1/2008/15 and FXD 1/2018/20, with 4.9-years and 19.9-years to maturity, and coupons of 12.5 percent and 13.2 percent respectively, in a bid to raise 40.0 billion shillings for budgetary support.

The overall subscription rate for the issue came in at 81.9 percent with the weighted average rate of accepted bids coming in at 12.3 percent and 13.3 percent respectively in line with our expectations of 12.1 percent to 12.3 percent and 13.0 percent to 13.3 percent respectively.

The government accepted a total of 26.9 billion shillings of the 32.8 billion shillings worth of bids received, translating to an acceptance rate of 82.2 percent.

Liquidity levels declined in the money market as indicated by the increase in the average interbank rate to 4.8 percent from 4.6 percent recorded the previous week, as banks made Value Added Tax (VAT) payments.

There was a decline in the average volumes traded in the interbank market by 4.2 percent to 13.8 billion shillings from 14.4 billion shillings the previous week.