T-Bills End May With Neck High, Subscription Above 100%

During the month of May, T-bill auctions recorded an oversubscription, with the overall subscription rate coming in at 103.7 percent, compared to 72.8 percent recorded in the month of April.

The oversubscription is attributable to high liquidity in the money markets during the month supported by government payments.

The subscription rates for the 91-day, 182-day, and 364-day paper rose to 151.3, 61.5, and 126.8 percent from 86.8, 28.4, and 111.7 percent recorded in April.

The Central Bank remained disciplined in rejecting expensive bids in order to ensure the stability of interest rates as evidenced by them rejecting expensive bids, leading to a marginal increase of 0.1 percentage points to 7.3, 8.2, and 9.2 percent across the various tenors  91-day, 182-day, and 364-day papers.

The T-bills acceptance rate came in at 80.1 percent during the month, compared to 97.2 percent recorded in April, with the government accepting a total of 79.7 billion shillings of the 99.5 billion shillings worth of bids received.

Last week

Last week, T-bills were oversubscribed, with the subscription rate coming in at 102.5 percent down from 149.3 percent the previous week.

The subscription rate of the 91-day and 182-day papers declined to 81.3 percent and 58.4 percent from 271.0 and 104.9 percent recorded the previous week, respectively.

The subscription rate for the 364-day paper however improved to 155.0 percent from 145.0 percent recorded the previous week.

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

The acceptance rate declined to 58.5 percent from 74.1 percent recorded the previous week, with the government accepting 14.4 billion shillings of the 24.6 billion shillings bids received.

The 91-day T-bill is currently trading at a yield of 7.3 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 increased lending to the private sector, forcing the government to accept expensive bids in order to secure funds from investors to meet their domestic borrowing target.

READ: T-Bills Under-subscribed For The Second Week In A Row