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T-Bills Oversubscribed as Government’s Domestic Borrowing Hits Ksh 390.2 Bn

BY Soko Directory Team · June 25, 2018 05:06 am

Last week, T-bills were oversubscribed with the subscription rate coming in at 214.7 percent down from 259.5 percent the previous week.

The subscription rates for the 91, 182 and 364-day papers came in at 136.6, 171.5, and 289.2 percent compared to 137.9, 221.6, and 345.9 percent respectively the previous week.

Yields on the 91 and 182- day papers declined by 10 bps to 7.7 percent and 9.7 percent from 7.8 percent and 9.8 percent in the previous week respectively.

Yields on the 364-day paper declined by 20 bps to 10.5 percent from 10.7 percent the previous week according to stats released by Cytonn Investments.

The acceptance rate for T-bills increased to 98.8 percent from 29.5 percent the previous week, with the government accepting a total of 50.9 billion shillings of the 51.5 billion shillings worth of bids received, against the 24.0 billion shillings on offer.

The acceptance rate last week increased to 98.8 percent which may be as a result of the government taking advantage of the declined yields despite being 33.7 percent ahead of its pro-rated domestic borrowing target for the current fiscal year.

The government has already borrowed 390.2 billion shillings domestically against a target of 291.9 billion shillings.

The Kenyan Government issued a new 15-year Treasury bond (FXD 1/2018/25) for the month of June with the coupon set at 13.4 percent in a bid to raise 40.0 billion shillings for budgetary support.

The overall subscription rate for the issue came in at 25.3 percent with the market-weighted average bid rate coming in at 13.7 percent 20 bps above the average acceptance rate of 13.5 percent.

The government accepted 5.9 billion shillings out of the 10.1 billion shillings worth of bids received, translating to an acceptance rate of 51.1 percent.

The government is set to embark on a new borrowing cycle soon with the domestic target set at 271.9 billion shillings (equivalent to 2.8% of GDP).

The draft Financial Markets Conduct Bill prepared by the National Treasury did not point to a repeal or revision of the cap. The National Treasury, however, has proposed a repeal of the interest rate cap, which if repealed can result in upward pressure on interest rates; banks would resume pricing of loans to the private sector based on their risk profiles, direct more funding into loans versus government paper, and consequently reducing the amount of liquidity available for government paper hence putting upward pressure on rate.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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