It looks like the T-Bills will be smiling for the better part of 2020. They kicked off the year with an oversubscription after being in the red towards the end of 2019. They have been above the 100-mark since January.
Last week saw the subscription of the T-Bills coming in at 195.8 percent. Despite this being an oversubscription, it was lower than the 217.4 percent that was recorded the previous week. The trend is expected to continue into the new week.
According to Cytonn Investments, the continued oversubscription of the T-Bills has been attributed to the favorable liquidity in the money market as a result of the ongoing government payments.
“We note that the 364-day paper continued to receive the most interest from investors having received the highest subscription of the 3 papers at 379.0 percent,” Cytonn wrote in their latest weekly report.
The 364-day paper’s high interest from investors is as a result of the market currently pricing that the government will be under pressure to meet its domestic obligations, and as such, bias towards short-term dated papers in order to avoid duration risk.
“The current pricing has seen most investors keen on the primarily fixed income, finding the 364-day paper more attractive on a risk-adjusted return basis,” said Cytonn.
The yield on the 91, 182 and 364-day papers remained unchanged during the sessions last week at 7.3, 8.3, and 9.3 percent respectively.
The overall acceptance rate for the T-Bills rose to 64.2 percent last week, from 53.6 percent the previous week. The government accepted 32.2 billion shillings of the 47 billion shillings of bids received.
As the government continues with the payments into the new week, and with investors seemingly focused on the 364-day paper, the massive leaving towards the paper as compared to the other two is likely to be experienced this week.
READ: T-Bills Ended Njaanuary With An Over-subscription – Cytonn
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