T-Bill Subscription Dips To 48.8% Due To Tight Liquidity

T-bills were under-subscribed last week, with the overall subscription rate coming in at 48.8 percent, down from 93.8 percent recorded the previous week.

The under-subscription of the T-Bills last week, according to Cytonn Investments, was partly attributable to the tight liquidity in the inter-bank markets evidenced by the rise in the average inter-bank rate to 4.7 percent from 3.3 percent recorded the previous week.

The tightened liquidity in the inter-bank rate during the week was mainly due to the statutory tax payments that were due last week, coupled with the beginning of a new cash reserve ratio (CRR) cycle.

The subscription rate for the 91-day, 182-day and 364-day paper decreased to 43.5, 19.3 and 80.4 percent from 182.1, 24.4 and 127.9 percent recorded the previous week, respectively.

The yields on the 91-day remained unchanged at 7.3 percent while the yields on the 182-day paper declined to 8.2 percent from 8.3 percent. The yields on the 364-day paper, however, increased to 9.6 percent from 9.5 percent recorded the previous week.

The acceptance rate for T-bills declined to 76.2 people from 96.0 percent the previous week, with the government accepting 8.9 billion shillings of the 11.7 billion shillings worth of bids received.

Last week, the Kenyan Government went back in the primary market with a tap sale for the 20-year infrastructure bond, issue No. IFBI/2018/20 with similar features as the initial issue, the previous week in a bid to raise 22.4 billion shillings.

The coupon is set at 11.95 percent while the average yield is set at 12.2 percent. Last week, the Government accepted 27.6 billion shillings compared to a target of 50.0 billion shillings at an average yield of 12.2 percent.

The funds received from the IFB Sale mainly went to the redemption of 34.6 billion shilling 5-Year bond issue no: FXD3/2013/5 that was due for payment on Monday. The proceeds will be used for funding infrastructure projects in the road, water and energy sectors.

The period of sale in the tap sale has however been lengthened to 6 days from, 21^st November 2018 to 27^th November 2018 or upon attainment of quantum, whichever comes first.