T-bills remained oversubscribed last week, however, the overall subscription rate decreased to 133.3 percent from 249.2 percent recorded the previous week.
The continued oversubscription of T-Bills, according to Cytonn Investments, is attributable to favorable liquidity in the market supported by government payments.
The yields on the 91-day paper remained unchanged at 6.7 percent while that of the 182-day and 364-day papers declined by 0.1 percentage points and 0.2 percentage points to 7.4 and 8.6 percent respectively from 7.5 and 8.8 percent recorded the previous week.
The acceptance rate increased to 94.2 percent from 52.0 percent recorded the previous week, with the government accepting a total of 30.1 billion shillings of the 32.0 billion shillings worth of bids received, higher than the weekly quantum of 24.0 billion.
Investors’ participation remained skewed towards the longer-dated paper, with the continued demand being attributable to the scarcity of newer short-term bonds in the primary market.
The 182-day registered improved subscription to 48.2 percent from 35.2 percent the previous week. The subscription rates for the 91-day and 364-day papers decreased to 53.8 percent and 250.2 percent from 103.6 percent and 521.6 percent recorded the previous week respectively.
During the week, the Kenyan Government issued its first T-Bond for the 2019/2020 fiscal year with a tenor of 15-years, issue number FXD 3/2019/15.
The bond has a market-determined coupon rate and the value date set on 29th July 2019. The period of sale is from 2nd July to 23rd July 2019. We shall provide the bidding recommendation for this bond issue in our next report.
Read:
- T-Bills Remain Oversubscribed During the Week Due to Improved Liquidity
- T-Bills Sustained an Oversubscription Last Week as Liquidity Became Favorable
In the money markets, 3-month bank placements ended the week at 8.8 percent (based on what we have been offered by various banks), 91-day T-bill at 6.7 percent an average of Top 10 Money Market Funds at 8.7 percent with the Cytonn Money Market Fund closing the week at 11.0 percent.
Liquidity:
During the week, the average interbank rate declined to 2.0 percent from 2.6 percent recorded the previous week, pointing to improved liquidity conditions in the money market supported by government payments, which offset tax remittances during the week.
This saw commercial banks’ excess reserves coming in at 16.4 billion shillings in relation to the 5.25 percent cash reserves requirement (CRR).
The average volumes traded in the interbank market gained by 81.1 percent to 9.7 billion shillings from 5.4 billion shillings the previous week.