The subscription of the T-Bills has remained below the market line of 100 percent for the second week running according to the weekly report released by Cytonn Investments.
According to the report, T-bills remained undersubscribed last week with the subscription rate rising to 98.3 percent from 86.4 percent recorded the previous week.
NOTE: T-Bills are said to be undersubscribed if the subscription falls below 100 percent and said to be oversubscribed if the subscription rate comes above 100 percent.
The increase in the subscription rate is partly attributable to a slight improvement in liquidity conditions in the money market during the week, which saw the average inter-bank rate declining to 7.0 percent from 7.5 percent recorded the previous week.
The yield on the 91-day and 364-day papers remained unchanged at 6.4 and 9.8 percent respectively, while the yield on the 182-day paper rose by 0.1 percentage points to 7.3 percent from 7.2 percent recorded the previous week.
The acceptance rates increased to 71.7 percent from 55.2 percent recorded the previous week, with the government accepting Kshs 16.9 bn out of the Kshs 23.6 bn worth of bids received.
For the month of October, the National Treasury is issuing a tax-exempt 16-year 60 billion shilling infrastructure bond with market-determined coupon rates for the purpose of financing the infrastructure projects in the FY 2019/20 budget estimates.
The period of sale is from 2nd October to 22nd October 2019. As per the historical trend, “we expect the infrastructure bond to attract a lot of interest due to its tax-free incentive that translates to higher returns, thus recording higher subscription rates than other Treasury Bonds.”
In the money markets, 3-month bank placements ended the week at 8.6 percent (based on what Cytonn had been offered by various banks), the 91-day T-bill came in at 6.4 percent.
The average of Top 5 Money Market Funds came in at 10.0 percent unchanged from the previous week with the Cytonn Money Market Fund closing the week at 10.9 percent from 10.4 percent recorded the previous week.