T-bills were under-subscribed last with the overall subscription rate coming in at 87.4 percent, a decline from 106.4 percent recorded the previous week.
The subdued performance was partly attributable to the tight liquidity position in the interbank market, as evidenced by the average interbank rate, which rose to 3.0 percent from 2.7 percent recorded the previous week.
The subscription rate for the 364-day paper increased to 167.1 percent from 144.3 percent the previous week, while the subscription rate for the 91-day and 182-day papers declined to 49.1 percent and 23.0 percent from 128.4 percent and 59.8 percent recorded the previous week, respectively.
Investor participation remained skewed towards the longer-dated paper, attributed to the scarcity of newer short-term bonds in the primary market. The yields on the 182-day and 364-day paper remained unchanged at 8.3 percent and 9.5 percent.
The yield on the 91-day paper declined to 7.3 percent from 7.4 percent recorded the previous week. The acceptance rate for T-bills declined to 89.0 percent from 100.0 percent the previous week, with the government accepting 18.7 billion shillings of the 21.0 billion shillings worth of bids received.
Liquidity:
The average interbank rate increased to 3.0 percent from 2.7 percent the previous week, while the average volumes traded in the interbank market rose by 29.6 percent to 29.5 billion shillings from 22.7 billion shillings the previous week.
The higher interbank rate points to tightened liquidity conditions, attributed to the mobilization of funds by Banks for PAYE remittances.
Kenya Eurobonds:
According to Bloomberg, the yields on the 5-year and 10-year Eurobonds issued in 2014 both increased by 0.1 percentage points to 4.8 percent and 7.5 percent from 4.7 percent and 7.4 percent recorded the previous week, respectively.
Since the mid-January 2016 peak, yields on the Kenyan Eurobonds have declined by 2.1 percentage points and 4.4 percentage points for the 10-year and 5-year Eurobonds, respectively, an indication of the relatively stable macroeconomic conditions in the country.