T-Bills Subscription Hits 165.7% From 136.8% Previously

T-bills were oversubscribed last week, with the subscription rate coming in at 165.7 percent up from 136.8 percent the previous week.

The subscription rates for the 91, 182 and 364-day papers came in at 120.8, 150.8, and 198.4 percent compared to 122.9, 124.2, and 155.1 percent 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 improved to 91.2 percent from 81.1 percent the previous week with the government accepting a total of 36.3 billion shillings of the 39.8 billion shillings worth of bids received, against the 24.0 billion shillings on offer.

Domestic Borrowing

The government of Kenya is currently 33.0 percent ahead of its pro-rated domestic borrowing target for the current fiscal year, having borrowed 342.5 billion shillings against a target of 257.5 billion shillings.

Treasury Bonds

For the month of May 2018, the Kenyan Government has issued a new 15-year Treasury bond (FXD 1/2018/15) with the coupon set at 12.7 percent.

The issuance of the bonds was in a bid to raise 40.0 billion shillings for budgetary support with the sale period expected to end on 22nd May

Liquidity Levels

Liquidity levels declined in the money market as indicated by the increase in the average interbank rate to 5.0 percent from 4.8 percent recorded the previous week following tax remittances by banks.

There was an increase in the average volumes traded in the interbank market by 4.7 percent to 15.5 billion shillings from 14.8 billion shillings the previous week.

Eurobond

According to Bloomberg, the yield on the 5-year Eurobond issued in June 2014 increased by 10 bps to 4.5 percent from 4.4 percent the previous week, while the yield on the 10-year Eurobond remained unchanged at 6.4 percent.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.3 percent points and 3.2 percent points for the 5-year and 10-year Eurobonds, respectively.

Key to note is that these bonds currently have 1.1 and 6.1-years to maturity for the 5-year and 10-year bonds, respectively.