T-Bills Blooms in July, Closing the Month at 157.4 Percent

The month of July saw the T-bills bloom recording an oversubscription with the average subscription rate coming in at 157.4 percent a decline from 217.7 percent recorded in June.

The average subscription rates for the 91, 182 and 364-day papers came in at 70.2, 90.9 and 258.6 percent from 131.6, 170.9 and 298.9 percent the previous month, respectively, with investors’ participation remaining skewed towards the longer-dated paper.

The yields on the 91-day, 182-day, and 364-day papers declined by 11.7 bps, 55.5 bps and 44.9 bps to 7.6, 9.1 and 10.1 percent respectively.

The T-bills acceptance rate came in at 75.4 percent during the month, compared to 53.1 percent in June with the Kenyan government accepting a total of 140.4 billion shillings of the 188.8 billion worth of bids received, indicating that bids were largely within ranges the Central Bank of Kenya (CBK) deemed acceptable.

Last week, T-bills were undersubscribed, with the subscription rate coming in at 60.4 percent down from 88.2 percent the previous week, as a result of tight liquidity in the market attributed to slow government spending that usually characterizes the beginning of the fiscal year.

The subscription rates for the 91-day, 182-day, and 364-day papers came in at 14.2, 51.5, and 87.9 percent compared to 50.6, 58.6 and 133.0 percent the previous week respectively.

Yields on the 91- day paper increased marginally by 0.3 bps to 7.6 percent while yields on the 182-day and 364-day papers declined by 2.8 bps and 8.0 bps to 9.1 percent and 10.0 percent respectively.

The acceptance rate for T-bills declined to 96.8 percent from 99.3 percent the previous week, with the government accepting a total of 14.0 billion shillings of the 14.5 billion worth of bids received, against the 24.0 billion on offer.

The 91-day T-bill is currently trading at 7.6 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.