T-Bill Uptake Still Below 100% As October Nears The End

T-Bills have remained undersubscribed for the third week even as the month of October nears the end according to the weekly report released by Cytonn Investments.

Last week, T-bills remained undersubscribed, with the subscription rate declining to 72.8 percent from 80.6 percent recorded the previous week.

The decline in the subscription rate is partly attributable to the 16-year infrastructure bond sale that closed this week.

The yield on the 91-day, 182-day, and 364-day papers remained unchanged at 6.4, 7.2, and 9.8 percent respectively.

The acceptance rates increased to 94.3 percent from 67.8 percent recorded the previous week, with the government accepting 16.5 billion shillings out of the 17.5 billion shillings worth of bids received.

The Infrastructure Bond

For the month of October, the National Treasury issued a tax-exempt 16-year 60.0 billion shillings infrastructure bond with market-determined coupon rates for the purpose of financing the infrastructure projects in the FY 2019/20 budget estimates.

“The bond was oversubscribed as per our expectations due to its tax-free incentive that translates to higher returns,” said Cytonn Investments.

The bond received bids totaling to 86.9 billion shillings of the 60.0 billion shillings on offer, translating to a subscription rate of 144.9 percent.

“The weighted average rate of accepted bids was at 12.4 percent in line with our expectations of 12.3 – 12.5 percent,” Cytonn added.

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, as recorded in the previous week.

Cytonn Money Market Fund closing the week at 10.96 percent from 11.0 percent recorded the previous week.