T-Bill Subscription still below Expectations for the Third Week Running

T-bills remained undersubscribed last week, with the overall subscription rate increasing to 92.3 percent from 57.9 percent recorded the previous week.

The slightly improved subscription of the T-Bills was attributable to improved liquidity in the market following the end of the monthly Cash Reserve Requirement (CRR) cycle.

The yields on the 91-day, 182-day, and 364-day papers declined by 3.6 bps, 8.3 bps and 0.4 bps to 7.2, 7.8 and 9.3 percent respectively.

The acceptance rate declined to 75.0 from 99.9 percent recorded the previous week, with the government accepting a total of 16.6 billion shillings of the 22.1 billion shillings worth of bids received.

Investors’ participation was skewed towards the longer-dated paper, with the 364-day recording improved subscription to 193.0 from 59.7 percent the previous week

The subscription rates for the 91-day and 182-day papers declined to 49.8 and 8.0 percent from 88.0 and 44.1 percent recorded the previous week, respectively.

The Interbank Rate

Last week, the average interbank rate declined to 5.7 percent from 6.4 percent recorded the previous week

The decline is said to be due to the improved liquidity conditions in the money market, following the end of the monthly Cash Reserve Requirement (CRR) cycle and supported by government payments, which offset tax remittances by banks.

The average volumes traded in the interbank market rose by 46.8 percent to 20.0 billion shillings from 13.6 billion shillings the previous week.

Kenya Eurobonds:

According to Bloomberg, the yield on the 10-year Eurobond issued in 2014 declined by 0.1 percentage points to 6.3 percent from 6.4 percent the previous week, while that of the 5-year rose by 0.3 percentage points to 4.5 percent from 4.2 percent the previous week.

Key to note is that these bonds have 1.3-months and 5.1-years to maturity for the 5-year and 10-year, respectively.

Source: Weekly Cytonn Report