T-Bills Continue To Wobble As The Month Nears The End

Last week, T-bills continued to be undersubscribed, with the subscription rate coming in at 56.2 percent down from 57.7 percent the previous week.

The undersubscription of T-Bills is attributable to the primary auction for the FXD 4/2019/10 treasury bond that closed on 19^th November 2019, with market participants focusing on the primary Treasury bond market.

The yield on the 91-day papers increased by 0.4 percentage points to 7.1 percent from 6.7 percent while the 182-day paper increased by 0.4 percentage points to 8.2 percent from 7.8 percent recorded the previous week.

The 364-day paper, however, remained unchanged at 9.8 percent.

The acceptance rate decreased to 88.4 percent from 99.9 percent recorded the previous week, with the government accepting 11.9 billion shillings of the 13.5 billion shillings bids received.

The increase in yields on the 91-day and 182-day papers can be attributed to the expected increase in interest rates due to the recent interest rate cap repeal.

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The bond was undersubscribed, with the subscription rate coming in at 76.8 percent on the back of an expected increase in private sector credit with banks now looking to lend to the private sector, due to the interest rate cap repeal, and the bond yield coming in at 12.5 percent.

The acceptance rate on the bond was 73.9 percent with the government accepting 28.4 billion shillings of the 38.4 billion shillings worth of bids received.

In the money markets, 3-month bank placements ended the week at 8.4 percent (based on what we have been offered by various banks).

The 91-day T-bill came in at 7.1 percent while the average of Top 5 Money Market Funds came in at 9.9 percent unchanged from the previous week.

The Cytonn Money Market Fund closed the week at 10.6 percent unchanged from the previous week.

For more information on this article, get the full Cytonn Report here.

Edited by Juma