T-bills were oversubscribed last week, with the overall subscription rate coming in at 120.4 percent up from 102.2 percent recorded the previous week due to improved liquidity in the money market.
Yields on the 91-day and 364-day papers declined by 10 bps each to 7.6 percent and 9.9 percent from 7.7 percent and 10.0 percent in the previous week respectively while the yield on the 182-day paper remained unchanged at 9.0 percent.
The acceptance rate for T-bills declined to 79.3 percent from 95.8 percent the previous week with the government accepting 22.9 billion shillings of the 28.9 billion shillings worth of bids received.
The subscription rate for the 182-day and 364-day papers improved to 94.1 percent and 175.4 percent from 72.8 percent and 110.9 percent the previous week.
The subscription rate for the 91-day paper declined to 48.4 percent from 153.9 percent the previous week, with investors’ participation remaining skewed towards the longer-dated paper attributed to the scarcity of newer short-term bonds in the primary market.
Government Bonds
The Kenyan Government issued a new 10-year Treasury bond (FXD 1/2018/10) with a market-determined coupon rate in a bid to raise 40.0 billion shillings for budgetary support.
The issue was under-subscribed, with the overall subscription rate coming in at 74.6 percent while the weighted average rate of accepted bids came in at 12.7 percent.
Analysts from Cytonn Investments attribute the continued under subscription of government bonds to investors being cautious in lengthening their bond portfolio duration due to uncertainties in the interest rate environment as a result of the ongoing debate on the repeal of interest rate cap, which if passed, might result into an upward pressure on interest rates.
The government accepted 19.4 billion shillings out of the 29.8 billion shillings worth of bids received, translating to an acceptance rate of 64.9 percent.