During the month of November, T-bills remained undersubscribed, with the overall subscription rate coming in at 90.2 percent compared to 84.5 percent recorded in the month of October 2019.
The continued undersubscription of T-Bills has partly been attributed to investors holding back in anticipation of a potential increase in the risk premium for government securities following the repeal of the interest rate cap, which is expected to result in an increase in interest rates.
The continuous undersubscription of T-Bills has seen the bond turnover declining by 2.2 percent to 35.0 billion shillings in November from 35.8 billion shillings in October.
The subscription rates for the 91-day and the 364–day came in at 78.3 and 152.1 percent, a decline from 79.4 and 155.5 percent recorded in October, respectively.
The subscription rates for the 182-day T-bill, however, increased to 33.1 percent from 15.6 percent recorded in October.
The yields on the 91-day and 182-day T bills increased by 0.7 percentage points and 1.0 percentage points to 7.1 and 8.2 percent from 6.4 and 7.2 percent respectively.
During the week, T-bills continued to be undersubscribed, with the subscription rate coming in at 34.8 percent(the lowest level this year), down from 56.2 percent the previous week.
The yield on the 91-day, 182-day, and 364-day papers remained unchanged at 7.1, 8.2 and 9.8 percent respectively.
The acceptance rate dropped to 59.7 percent from 88.4 percent recorded the previous week, with the government accepting 5.0 billion shillings of the 8.4 billion shillings worth of bids received.
The 91-day T-bill is currently trading at a yield of 7.1 percent which is below its 5-year average of 8.6 percent. The increasing yield on the 91-day paper is mainly attributable to the repeal of interest rate caps.
As the month of December kicks off and as the festivities start to take shape, things might not be easy for the T-Bills. Should we start looking at 2020?