T-Bills Beat Covid-19 Twice With An Oversubscription

During the week, T-bills remained oversubscribed, with the subscription rate coming in at 149.3 percent, up from 100.4 percent the previous week.

This is the second time in many weeks, especially in the face of Covid-19 that T-Bills are up with an oversubscription.

The oversubscription is partly attributable to the high liquidity in the money markets as well as the increased preference for shorter-dated papers by investors.

The subscription rate for the 91-day, 182-day, and 364-day papers increased to 271.0, 104.9, and 145.0 percent respectively, from 191.8, 44.9, and 119.3 percent recorded the previous week, respectively.

The yields on the 91-day, 182-day, and 364-day papers all remained unchanged at 7.3, 8.2, and 9.2 percent respectively.

The acceptance rate declined to 74.1 percent, from 99.5 percent recorded the previous week, with the government accepting 26.6 billion shillings of the 35.8 billion shillings of bids received.

The recently issued five-year bond, FXD1/2020/5, was undersubscribed, with the subscription rate coming in at 68.6 percent, as they received bids worth 20.6 billion shillings, lower than the offered amount 30.0 billion shillings.

The yield on the bond came in at 11.7 percent, in-line with our recommended bidding range of 11.5 – 11.7 percent. Despite the undersubscription the government rejected high bids only accepting 8.9 billion shillings out of the 20.6 billion shillings worth of bids received, translating to an acceptance rate of 43.5 percent.

In the money markets, Yield on the short term papers remained unchanged at 7.9, 7.3, and 10.0 percent for 3-month bank placements, 91-day T-bill, and the average yield of top 5 money market funds. The yield on the Cytonn Money Market Fund remained flat closing the week at 10.8 percent.

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