T-Bills Spikes To 148.7% During The Week As Liquidity Dips

T-bills were oversubscribed during last week with the overall subscription rate coming in at 148.7 percent down from 176.1 percent recorded the previous week due to improved liquidity in the money market.

Yields on the 91-day, 182-day, and 364-day papers declined by 0.1 percentage points to 7.6, 8.9 and 9.8 percent respectively from 7.7, 9.0 and 9.9 percent recorded the previous week.

The acceptance rate for T-bills declined to 76.7 percent from 77.8 percent recorded the previous week, with the government accepting a total of 27.4 billion shillings of the 35.7 billion shillings worth of bids received.

The subscription rate for the 182-day paper improved to 126.1 percent from 90.0 percent the previous week while the subscription rate for the 91-day and 364-day papers declined to 64.0 percent and 205.1 percent from 289.6 percent and 216.9 percent the previous week respectively.

The week saw investors’ participation remaining skewed towards the longer-dated paper attributed to the scarcity of newer short-term bonds in the primary market.

Liquidity

The average interbank rate declined to 5.5 percent from 5.8 percent the previous week, while the average volumes traded in the interbank market declined by 41.7 percent to 13.1 billion shillings from 22.5 billion shillings the previous week.

The decline in the average interbank rate points to improved liquidity, which the Central Bank of Kenya attributed to increased government payments extending from the end of August.

Kenya Eurobonds

According to Bloomberg, the yield on the 10-Year Eurobond issued in 2014 increased by 0.2 percentage points to 7.4 percent from 7.2 percent the previous week while the yield on the 5-year Eurobond declined by 0.1 percent points to 4.8 percent from 4.9 percent the previous week.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.0 percentage points and 2.3 percentage points for the 5-year and 10-year Eurobonds, respectively, an indication of the relatively stable macroeconomic conditions in the country.

Key to note is that these bonds have 0.8 years and 5.8-years to maturity for the 5-year and 10-year, respectively.