T-Bill Subscription Dips During The Week After Weeks of Oversubscription

T-Bills were undersubscribed during the week according to stats compiled by Cytonn Investments.

The overall subscription rate of the T-Bills declined to 88.7 percent from 148.1 percent recorded the previous week.

The decline in subscription rate was attributable to low liquidity levels in the money markets following the cyclical liquidity tightness due to the start of the new cash reserves requirement (CRR) cycle.

The yield on the 91-day and 182-day papers declined to 7.3 percent and 8.0 percent from 7.4 percent and 8.1 percent respectively.

The yield on the 364-day paper remained unchanged at 9.4 percent.

This is the first time in months that T-Bills were undersubscribed after dominating the oversubscription rate since the year begun.

The Fuel Prices

According to the Energy Regulatory Commission (ERC), petrol prices have increased by 5.2 percent to 106.6 shillings from 101.4 shillings per litre.

The prices of diesel and kerosene have increased by 5.7 percent and 2.8 percent to 102.1 shillings and 102.2 shillings per litre from 96.6 and 99.5 shillings per litre.

“We expect a rise in the transport index, which carries a weighting of 8.7 percent in the total consumer price index (CPI), due to the increased petrol and diesel prices,” said analysts from Cytonn Investments.

Analysts also expect inflationary pressure in the food and non-alcoholic beverages index, mainly driven by a rise in food prices following the delay of the March-May long rains.

“Based on the factors mentioned above, we are projecting the y/y inflation rate for the month of April to come in within the range of 4.6 – 5.0 percent, a rise compared to 4.4 percent recorded in March.

There is already an increase in the prices of basic commodities such as maize flour and milk.

A 2-kilogram packet of Unga has increased by 28 percent from 85 shillings to between 109 and 115 shillings with the prices set to rise due to the ongoing drought.

The price of milk has increased by five shillings from 50 to 55 shillings even as the government plans to buy 200 million litres of milk from the East Africa Community.