T-bills were under-subscribed last week, with the overall subscription rate coming in at 93.8 percent up from 87.4 percent recorded the previous week.
The under-subscription, according to analysts from Cytonn Investments, was partly attributable to the 20-year tenor infrastructure bond sale that closed during the week.
The subscription rate for the 91-day and 182-day paper increased to 182.1 percent and 24.4 percent from 49.1 percent and 23.0 percent recorded the previous week, respectively.
The subscription rate for the 364-day paper declined to 127.9 percent from 167.1 percent recorded the previous week.
The yields on the 91-day, 182-day, and 364-day paper remained unchanged at 7.3, 8.3, and 9.5 percent respectively.
The acceptance rate for T-bills improved to 96.0 percent from 89.0 percent the previous week, with the government accepting 21.6 billion shillings of the 22.5 billion shillings worth of bids received.
During the week, the Kenyan Government issued a 50.0 billion shillings, 20-year infrastructure bond, issue No. IFBI/2018/20 at a coupon of 11.95%, aimed at funding infrastructure projects in the road, water and energy sectors.
The issue of the bond was under-subscribed, with the subscription rate coming in at 80.8 percent with bids worth 40.4 billion shillings received against the 50.0 billion shillings on offer.
The subscription rate for the bond was lower in comparison to the 15-year infrastructure bond issue No. IFB1/2018/15 floated in January 2018, which recorded a 139.5 percent subscription with the total bids coming in at 55.8 billion shillings of the 40.0 billion shillings on the issue.
In the infrastructure bond issue, the government accepted 27.6 billion shillings out of the 40.4 billion shillings worth of bids received, translating to an acceptance rate of 68.3 percent.
The average accepted yield for the issue came in at 12.2 percent. There was uncertainty over the interest rate environment that has made investors reluctant to commit to long-term bonds.
Investors were reluctant to buy into the issue because of relatively low returns due to the continued decline of yields in the primary auction as the government continues to reject expensive bids.
The 20-year bond’s coupon was set at 11.95 percent with the accepted yield coming in at 12.2 percent, which is relatively low compared to the shorter tenor 15-year infrastructure bond issued in January, which had a coupon of 12.5 percent with the accepted yield coming in at 12.5 percent.