T-Bills Back Into Under-subscription Zone After Blooming For A Week

T-Bills were back into the under-subscription zone last week, a week after crossing the line into the oversubscription zone.

According to the weekly Cytonn Investments Report, last week saw T-bills being undersubscribed, with the overall subscription rate falling to 98.4 percent from 103.7 percent recorded the previous week.

The under-subscription was partly attributable to tightened liquidity in the money market during the week attributable to a disruption in the budget cycle with delays in cash disbursements by the government.

The yields on the 91-day paper declined by 0.1 percentage points to 6.3 percent from 6.4 percent recorded the previous week, while the yields on the 182-day paper remained unchanged at 7.2 percent.

The 364-day paper rose by 0.1 percentage points to 9.8 percent from 9.7 percent recorded the previous week.

The acceptance rate of the T-Bills fell to 64.9 percent from 85.4 percent recorded the previous week, with the government accepting 15.3 billion shillings out of the 23.6 billion shillings worth 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).

The 91-day T-bill came in at 6.3 percent, while the average of Top 5 Money Market Funds by yield came in at 10.0 percent unchanged from the previous week.

The Cytonn Money Market Fund closing the week at 10.9 percent from 11.0 percent recorded the previous week.

The Interbank Rate

During the week, liquidity tightened with the average interbank rate increasing to 7.3 percent from 6.6 percent recorded the previous week.

This is attributable to a glitch in the budget cycle with delays in cash disbursements by the government. This saw commercial banks’ excess reserves increase to come in at 14.4 billion shillings in relation to the 5.25 percent cash reserves requirement (CRR), from 11.4 billion shillings the previous week.

The average volumes traded in the interbank market increased by 40.6 percent to 8.4 billion shillings from 6.0 billion shillings the previous week.

Read: T-Bills Bounce Back To Oversubscription After Weeks Of Under