T-bills remained undersubscribed, with the subscription rate coming in at 62.6 percent down from 78.4 percent the previous week.
The continuous under-subscription of T-Bills is partly attributable to tightened liquidity in the money market during the week as a result of tax payments with Pay as You Earn (PAYE) due on 9th September 2019.
The yield on the 91-day and 182-day papers remained unchanged at 6.4 and 7.0 percent respectively, while the yield on the 364-day paper rose to 9.5 percent from 9.4 percent recorded last week.
The acceptance rate rose to 99.9 percent from 95.1 percent recorded the previous week, with the government accepting 15.01 billion shillings out of the 15.02 billion shillings of bids received.
In the money markets, 3-month bank placements ended the week at 8.6 percent (based on what we have been offered by various banks).
The 91-day T-bill came in at 6.4 percent while the average of Top 5 Money Market Funds came in at 10.1 percent compared to 10.0 percent last week.
The Cytonn Money Market Fund closing the week at 11.0 percent unchanged from last week.
The Interbank Rate
During the week, the average interbank rate increased to 5.5 percent from 4.6 percent recorded the previous week.
The rise in interbank rate pointed to tightened liquidity conditions in the money market attributable to tax payments with Pay as You Earn (PAYE) due on 9th September 2019.
This saw commercial banks’ excess reserves decline to come in at 6.6 billion shillings in relation to the 5.25 percent cash reserves requirement (CRR).
The average volumes traded in the interbank market declined by 37.1 percent to 7.4 billion shillings from 11.8 billion shillings the previous week.
Kenyan Eurobond
The yield on the 10-year Eurobond decreased by 0.2 percentage points to 5.1 percent from 5.3 percent the previous week.
The continued decline in yields has been attributed to increased demand for emerging market fixed-income securities in the wake of the pause by the US Fed on its three-year cycle of tightening its monetary policy, which had made returns from fixed income securities more attractive
During the week, the yield on `2018, 10-year and 30-year Eurobond both declined by 0.4 percentage points to 6.3 percent and 7.7 percent respectively from 6.7 percent and 8.1 percent recorded the previous week.
During the week, the yields on the 7-year Eurobond declined by 0.2% points to come in at 6.0%, from 6.2% the previous week, while the 12-year Eurobond fell by 0.4% points to 7.0%, from 7.4% the previous week.