T-Bill Subscription in April Spikes To 157.0% From 131.2%

During the month of April, T-bill auctions recorded an oversubscription, with the overall subscription rate coming in at 157.0 percent, a rise from 131.2 percent recorded in the month of March 2019.

The subscription rates for the 91-day, 182-day, and 364-day papers came in at 137.5, 88.2 and 233.6 percent higher than the 58.9, 77.3 and 214.1 percent registered in the previous month, respectively.

The yields on the 91-day, 182-day, and 364-day papers declined by 0.4, 0.2 and 0.1 percentage points to 7.3, 8.0 and 9.3 percent from 7.7, 8.2 and 9.4 percent recorded in March, respectively.

The T-bills acceptance rate came in at 77.4 percent during the month, compared to 75.7 percent recorded in March, with the government accepting a total of 145.9 billion shillings of the 188.4 billion shillings worth of bids received.

The Central Bank of Kenya (CBK) remained disciplined in rejecting expensive bids in order to ensure the stability of interest rates.

During the week

During the week, T-bills recorded an under-subscription, which came in at 49.0 percent down from 113.8 percent the previous week.

The decline in the subscription rate of the T-Bills last week is partly attributable to the waning liquidity in the money market during the week.

The yields on the 91-day 182-day and 364-day papers remained unchanged at 7.3, 8.0 and 9.3 percent respectively.

The acceptance rate improved to 100.0 percent from 95.4 percent recorded the previous week, with the government accepting all the bids received.

The 91-day T-bill is currently trading at a yield of 7.3 percent which is below its 5-year average of 8.8 percent.

The lower yield on the 91-day paper is mainly attributable to the low-interest rate environment that has persisted since the passing of the law capping interest rates.

“We expect this to continue in the short-term, given: The discipline of the CBK in stabilizing interest rates in the auction market by rejecting aggressive bids that are priced above market, for both T-bills and T-bonds, and the maintaining of the Central Bank Rate at 9.0% by the Monetary Policy Committee in their March 2019 meeting,” said analysts from Cytonn Investments in the weekly report.