T-Bills Determined To Cross Into 2020 In Under-subscription

T-Bills seems determined to cross into the New Year 2020 in undersubscription mode. The T-Bills have remained in the red for the better part of this month.

During the week, T-bills remained undersubscribed, with the subscription rate coming in at 17.0 percent the lowest recorded in the last two years, down from 64.1 percent the previous week.

The subscription of the T-Bills during the week is down from an average of 125.4 percent from January 2019 to November 7th, 2019 before the repeal of the rate cap; and 98.2% points lower than the YTD average of 115.2 percent.

The undersubscription is partly attributable to declined investor activity associated with the festive season, coupled with the reduced participation by banks since the repeal of the interest rate cap, with their focus now shifting to private sector lending.

READ: T-Bill Subscription Still In The Woods As Christmas Approaches

The yield on the 91-day and 364-day paper remained unchanged at 7.2 percent and 9.8 percent respectively. The yield on the 182-day paper increased to 8.2 percent from the 8.1 percent recorded the previous week.

The acceptance rate increased to 100.0 percent from 99.4 percent recorded the previous week, with the government accepting 4.1 billion shillings of the 4.1 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 7.2 percent while the average of Top 5 Money Market Funds came in at 10.0 percent, unchanged from the previous week.

The yield on the Cytonn Money Market remained unchanged at 10.9 percent recorded the previous week.

During the week, the average interbank rate increased marginally to 5.6 percent from 5.5 percent recorded the previous week, pointing to the tightening of liquidity in the money markets. Commercial banks’ excess reserves came in at 17.2 billion shillings in relation to the 5.25 percent cash reserves requirement (CRR).

The average interbank volumes increased by 14.8 percent to 21.3 billion shillings from 18.5 billion shillings recorded the previous week.

READ: The Best Investment Options for Young Adults in Kenya