Last week, T-bills remained under-subscribed, with the subscription rate coming in at 64.1 percent, up from 53.5 percent the previous week.
The current T-Bill subscription is down from an average of 125.4 percent from January 2019 to November 7th, 2019 before the repeal of the rate cap.
The subscription is also 54.0 percent lower than the YTD average of 118.1 percent, hence the under-subscription is attributable to reduced participation by banks who are now lending to the private sector, after the repeal of the interest rate cap.
The yield on the 91-day, 182-day, and 364-day paper remained unchanged at 7.2, 8.1 and 9.8 percent respectively. The acceptance rate increased very slightly to 99.4 percent from 99.2 percent recorded the previous week, with the government accepting 15.3 billion shillings of the 15.4 billion shillings of the bids received.
The National Treasury opened a tap-sale for a 5-year bond of 9.7 billion shillings (FXD 3/2019/5) during the week, with a coupon rate of 11.5 percent.
READ: Retirement Planning: How To Get Started For Maximum Benefits
The bond was slightly oversubscribed, with the subscription rate coming in at 100.3 percent and the bond yield coming in at 11.5 percent.
The continued high demand for short tenor bonds has been attributable to the negative bias by investors on longer-tenor bonds due to the relatively flat yield curve on the long-end brought about by the saturation of long-term bonds, coupled with the duration risk associated with long-term papers, thus making the short tenor bonds more attractive.
The acceptance rate on the tap sale was 100.0 percent with the government accepting the whole 9.7 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 Fund remained unchanged at 10.9 percent.