A Look At The Week As T-Bill Subscription Continue Hitting The Roof

The year 2020 seems to be carrying goodies for the T-Bills as subscription continues to oscillate above 150 percent.

The continued oversubscription is different from what the T-Bills recorded towards the end of 2019 where they seemed to be in the under-subscription zone to stay.

Last week, the T-Bills subscription was above 200 percent as contained in the Weekly Cytonn Investments report. The subscription came in at 207.3 percent from 195.8 percent recorded the previous week.

The liquidity levels remained favorable following the end of the monthly Cash Reserve Requirement (CRR) cycle and government payments according to the report.

“We note that the 364-day paper continued to receive the most interest from investors, having recorded the highest subscription rate of the 3 papers, at 392.8 percent,” said Cytonn.

The continued leaning of investors towards the 364-day paper is attributable to the market currently pricing that the government will be under pressure to meet its domestic target and as such a bias to shorter-dated papers in order to avoid duration risk.

As a result, investors have remained keen on the primary fixed income market, finding the 364-day T-bill more attractive on a risk-adjusted return basis.

The yield on the 91-day and 182-day papers remained unchanged at 7.3 and 8.3 percent, respectively.

The yield on the 364-day paper declined by 0.1 percentage points to 9.8 percent, from the 9.9 percent recorded the previous week.

The acceptance rate rose to 69.8 percent from 64.2 percent recorded the previous week, with the government accepting 34.7 billion shillings of the 49.8 billion shillings bids received.

Analysts from Cytonn are of the view that T-Bills will continue to bloom this year with the rate of the subscription remaining above 100 percent.

NOTE: When the T-Bill Subscription rate is above 100 percent, it is said to be an “oversubscription” and when it is below 100 percent, it is an “under-subscription”.

Cytonn Investments has been consistent in releasing both weekly and monthly reports in which they analyze all matters touching on the economy from T-Bills to Equities to general information about investments.

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