During the month of April, T-bill auctions recorded an undersubscription, with the overall subscription rate coming in at 72.8 percent, compared to 151.0 percent recorded in the month of March.
The undersubscription is partly 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 rates for the 91-day paper rose to 86.8 percent, from 81.6 percent recorded in March.
The subscription rates for the 182-day and 364-day papers, on the other hand, declined, coming in at 28.4 percent and 111.7 percent, lower than the 65.2 percent and 264.5 percent recorded in March, respectively.
“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 111.7 percent,” said Cytonn Investment in their report summarizing the month.
The Central Bank remained disciplined in rejecting expensive bids in order to ensure the stability of interest rates as evidenced by the yield on the 91-day paper declining marginally to 7.2 percent from 7.3 percent recorded in March while the 182-day and 364-day papers remained unchanged at 8.1 percent, and 9.1 percent.
The T-bills acceptance rate came in at 97.2 percent during the month, compared to 53.0 percent recorded in March, with the government accepting a total of 84.9 billion shillings of the 87.4 billion shillings worth of bids received.
During the week, T-bills were undersubscribed, with the subscription rate coming in at 74.6 percent, down from 81.7 percent the previous week.
The subscription rate of the 91-day and 182-day papers declined to 111.8 and 26.8 percent respectively, from 219.7 and 44.5 percent recorded the previous week, respectively.
The subscription rate for the 364-day paper however improved to 107.5 percent, from 63.8 percent recorded the previous week.
The yields on the 91-day, 182-day, and 364-day papers remained unchanged at 7.2, 8.1, and 9.1 percent respectively, similar to what was recorded the previous week.
The acceptance rate declined to 87.5 percent, from 99.5 percent recorded the previous week, with the government accepting 15.7 billion shillings of the 17.9 billion shillings bids received. The 91-day T-bill is currently trading at a yield of 7.2 percent, which is below its 5-year average of 8.6 percent.
The yield has, however, increased surpassing the 2019 average of 6.9 percent mainly attributable to the repeal of interest rate cap, which has seen banks prefer lending to the private sector, forcing the government to accept expensive bids in order to secure funds from investors.
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