T-Bills Subscription Hits the Roof at 167.5% in May

T-bill auctions recorded an oversubscription during the month of May according to a monthly report released by Cytonn Investments Limited.

The average subscription rate came in at 167.5 percent up from 103.1 percent recorded in the month of April. The subscription rates for the 91, 182 and 364-day papers came in at 130.2, 117.8 and 232.0 percent from 63.6, 94.8 and 127.2 percent the previous month respectively.

The yields on the 91 and 182-day papers declined by 10 bps each to 7.9 percent and 10.2 percent from 8.0 percent and 10.3 percent respectively. The yield on the 364-day paper remained unchanged at 11.1 percent during the month.

The T-bills acceptance rate came in at 81.8 percent during the month, compared to 90.0 percent in April, with the Kenyan government accepting a total of 131.2 billion shillings of the 160.8 billion shillings worth of bids received. The acceptance was against the 96.0 billion shillings on offer, indicating that bids were largely within ranges of the Central Bank of Kenya (CBK) deemed acceptable.

The government is currently ahead of its domestic borrowing target for the current fiscal year, having borrowed 374.1 billion shillings, against a target of 274.7 billion shillings.

Last week, T-bills were oversubscribed with the subscription rate coming in at 186.1 percent up from 184.2 percent the previous week.

The subscription rates for the 91, 182 and 364-day papers came in at 230.0, 117.1, and 237.6 percent compared to 194.6, 117.6, and 246.7 percent respectively the previous week.

Yields on the 91, 182-day and 364-day papers remained unchanged at 7.9, 10.2 and 11.1 percent respectively. The acceptance rate for T-bills declined to 47.7 percent from 85.4 percent the previous week.

The government accepted a total of 21.3 billion shillings last week of the 44.7 billion shillings worth of bids received, against the 24.0 billion shillings on offer.

According to the CBK, the government has reduced its borrowing appetite as it is ahead of its domestic borrowing target for the current fiscal year, and will only borrow to redeem maturing debt in coming weeks, hence the low acceptance rate this week.

The 91-day T-bill is currently trading at 7.9 percent which is below its 5-year average of 9.1 percent. The lower yield on the 91-day paper is mainly attributable to the low-interest rate environment experienced since the passing of the law capping interest rates.