T-Bill Subscription Dips To 108.4% But Still Above The 100% Mark

The subscription of T-Bills has continued being above the 100-percent mark for the third week running, this month.

During the trading sessions last week, the subscription of the T-Bills declined to 108.4 percent from 183.9 percent recorded the previous week.

The continued performance of T-Bills above the 100-percent mark, according to analysts from Cytonn Investments, is as a result of favorable liquidity in the market supported by government payments.

The yields for the 91-day and the 182-day paper dropped by 0.1 percentage points to 6.5 and 7.4 percent from 6.6 and 7.5 percent respectively.

The 365-day paper registered an improvement in subscription by 0.2 percentage points to 8.8 percent from 8.6 percent the previous week.

The acceptance rate for the T-Bills dropped marginally to 96.4 percent from 100 percent recorded the previous week.

The government accepted 25.1 billion shillings of the 26 billion shillings worth of bids received, higher than the weekly quantum of 24 billion shillings.

In terms of subscriptions, the 91-day paper led the way with 187.6 percent from just 81.1 percent the previous week.

The 182 and the 365-day papers recorded a drop in subscriptions to 69.7 and 115.6 percent from 111.1 and 297.7 percent the previous week.

The Government Bonds

The government of Kenya issued a 15-year bond issue for the month of July numbered FXD 3/2019/15.

The bond is set to be the first T-Bind for the 2019/2020 fiscal year and the third 15-year tenor bond for the year 2019.

From the 15-year tenor bond, the government aims to raise a total of 40 billion shillings for “budgetary support.”

In the bond markets, bonds with a 15-year maturity period are currently trading at 12.2 percent.

“We expect bids for the FXD 3/2019/15 to come in between 12.2 and 12.4 percent as well as ATA significantly high subscription rate,” said analysts from Cytonn Investments in their weekly report.

According to Cytonn Investments, the subscription of the current bond on the market will be determined by the government payments as well as the ongoing demonetization process.

The Money Markets

The 3-month bank placements in the money markets closed the week at 8.8 percent.

The 91-day paper ended the week at 6.5 percent with the average of top 5 money markets finishing at 9.9 percent.

Cytonn Money Market Fund closed the week at an average yield of 10.8 percent per annum.