T-Bills Under-subscribed in November But Performed Better Than October

During the month of November, T-bill auctions recorded an under subscription, with the average subscription rate coming in at 84.1 percent, an increase from 77.8 percent, recorded in October.

The average subscription rates for the 91-day, 182-day, and 364-day papers came in at 100.8, 31.6 and 129.9 percent from 108.1, 41.8 and 101.7 percent, in the previous month.

The yields on the 91-day and 182, day papers declined by 0.2 percentage points, to 7.3 percent and 8.2 percent from 7.5 percent and 8.4 percent, recorded in October, respectively, while the yield on the 364-day paper rose by 0.1 percent points to 9.6 percent from 9.5 percent recorded in October.

The T-bills acceptance rate came in at 92.6 percent during the month, compared to 92.4 percent recorded in October with the government accepting a total of 74.7 billion shillings of the 80.7 billion shillings 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 overall subscription rate coming in at 75.9 percent, up from 48.8 percent recorded the previous week. The under subscription was attributed to tight liquidity in the interbank market, which saw the average interbank rate increasing to 5.9 percent from 4.7 percent, the previous week.

The yields on the 91-day, 182-day, and 364-day papers remained unchanged at 7.3, 8.2, and 9.6 percent, the previous week, respectively. The acceptance rate rose to 94.7 percent from 76.2 percent the previous week, with the government accepting 17.3 billion shillings out of the 24.0 billion shillings of bids received.

The subscription rate for the 91-day and 182-day improved to 269.8 percent and 48.2 percent from 43.5 percent and 19.3 percent respectively, while the subscription rate for the 364-day paper declined to 26.1 percent from 80.4 percent, recorded the previous week.

The 91-day T-bill is currently trading at a yield of 7.3 percent, which is below its 5-year average of 9.0 percent. The lower yield on the 91-day paper is mainly attributable to the low-interest-rate environment that has been experienced since the passing of the law capping interest rates.