T-Bill Subscription Drops Below 100% As Covid-19 Rises

During the week, T-bills were undersubscribed for the first time in 10-weeks, with the subscription rate coming in at 87.9 percent, a whopping drop from 264.0 percent the previous week.

The undersubscription, according to Cytonn Investments, was attributable to investor’s preference to hold on to their cash due to low confidence in the market attributable to the Coronavirus outbreak.

The subscription rate of the 91-day, 182-day and 364-day paper declined to 13.7, 36.1 and 169.4 percent from 201.8, 92.5 and 460.4 percent respectively, the previous week.

The yields on the 91-day paper and 364-day paper remained unchanged at 7.3 and 9.1 percent respectively, while the yield on the 182-day paper declined by 0.1 percentage point to 8.0 percent from the 8.1 percent recorded the previous week.

The Monetary Policy Committee (MPC) is set to meet on Monday, 23^rd March 2020, to review the outcome of its previous policy decisions and recent economic developments, and to make a decision on the direction of the Central Bank Rate (CBR).

“We expect MPC to reduce the Central Bank Rate (CBR) by 100 bps to 7.25 percent from 8.25 percent. This decision will be driven by factors such as the instability in the Kenyan shilling and the expected cost-push inflation caused by shortages arising from supply chain disruptions,” said Cytonn Investment.

During the week, the Central Bank of Kenya (CBK), under Sections 9 and 51 of the CBK Act and following approval by the CBK Board, announced that it has transferred 7.4 billion shillings from its General Reserve Fund to the Government Consolidated Fund in support of the fight against Coronavirus.

During the week, the equities market was on a downward trajectory, with NASI, NSE 20 and NSE 25 declining by 0.5, 4.7 and 3.4 percent respectively, taking their YTD performance to losses of 20.1, 23.7 and 21.4 percent for the NASI, NSE 20 and NSE 25, respectively.

During the week, Equity Group, Co-operative Bank, DTB and Stanchart Bank, released their FY’2019 financial results, recording core eps growths of 13.8, 12.4 1.6, and 1.7 percent respectively.

READ: Co-op Bank Beats The Odds To Register Ksh 14.3 Billion In Profits