November Looks Promising For T-Bills As They Kick Off Above 100%

The month of November might be promising compared to that of October in terms of T-Bills subscription as they rejuvenated to maintain the subscription above 100 percent.

During the sessions last week, T-bills were oversubscribed, with the subscription rate coming in at 132.6 percent up from 114.3 percent the previous week.

The oversubscription of the T-Bills, according to Cytonn Investments, was partly attributable to favorable liquidity in the money market during the 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 increased by 0.1 percentage point to 7.3 percent from the 7.2 percent recorded in the previous week.

The acceptance rate for T-Bills during the week dropped to 83.5 percent from 86.5 percent recorded the previous week, with the government accepting 26.5 billion shillings of the 31.8 billion shillings of bids received.

The 91-day T-bill is currently trading at a yield of 6.4 percent which is below its 5-year average of 8.6 percent.

During the week, the National Treasury announced that it will issue a 10-year 50.0 billion shilling bond (FXD 4/2019/10) with market-determined coupon rates for Budgetary Support purposes.

The period of sale is from 6th November 2019 to 19^th November 2019. “As per the historical trend, we expect the market to maintain a bias towards the 10-year bond mainly driven by the perception that risks may not be adequately priced on the longer end of the yield curve, which is relatively flat due to saturation of long-term bonds.”

In the money markets, 3-month bank placements ended the week at 8.5 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 10.0 percent which was a 0.2 percent decrease from 10.2 percent recorded in the previous week.

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

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