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Favourable Liquidity In The Market Reason Behind Sustained T-Bill Oversubscription For A Third Week Running

BY Juma · July 29, 2019 12:07 am

Favorable liquidity in the market is the reason behind the sustained oversubscription of T-Bills for the third week running according to the latest Cytonn Investments Report.

Last week saw the subscription of T-Bills spike to 113.5 percent from 108.4 percent recorded in the previous week.

Yields on the 91-day, 182-day, and 364-day papers rose by 9.4, 0.7 and 20.3 percentage points to 6.6, 7.4, and 9.0 percent respectively.

Last week saw the acceptance rate of T-Bills slightly drop to 89.1 percent from 96.4 percent.

During the period, the government of Kenya accepted 24.3 billion shillings of the 27.2 billion shillings worth of bids received.

The 24.3 billion shillings worth of bids received by the government last week were above the quantum requirement of 24 billion shillings.

The 91-day and the 364-day paper registered an improvement in their subscription to 201.8 and 164.5 percent from 187.6 and 115.6 percent previously.

The 182-day paper dipped during the week with the subscription coming to 27.2 percent from 69.7 percent the previous week.

Government Bonds For The Month of July

During the month, the government of Kenya issued a 15-year bond (FXD 3/209/15). This was the first bond for the 2019/2020 financial year.

The 15-year bond is the third tenor bond issued by the National Treasury with the aim of raising 40 billion shillings for “budgetary support.”

The acceptance for the 15-year bond issue came in at 12.3 percent.

“The acceptance was inline with our expectations as highlighted in last week’s bidding range of 12.2 and 12.4 percent,” said analysts from Cytonn Investments Limited.

The issue’s subscription rate stood at 216.7 percent driven by the current high liquidity in the money markets attributable to the government payments as well as the effects of the current demonetization process.

The Money Markets

In the money markets, 3-month bank placements ended the week at 8.8 percent (this is based on what various banks have offered in terms of stats).

The 91-day T-Bill came in at 6.6 percent while the average of top 5 money market funds stood at 10.0 percent.

Cytonn Money Market Fund closed the week at an average yield of 11.0 percent per annum.

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com

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