T-Bill Subscription Dips From 271% To 149%

Last week, T-Bills remained oversubscribed, with the subscription rate coming in at 149.6 percent down from 271.5 percent the previous week.

The decline in the rate T-Bill subscription can be attributed to the primary bond auction that closed on 21^st July 2020 and had an average subscription rate of 303.0 percent.

The highest subscription rate was on the 91-day paper, which came in 270.4 percent, down from 746.9 percent recorded the previous week.

The subscription for the 182-day paper also declined to 13.9 percent from 107.8 percent recorded the previous week, while the subscription of the 364-day paper decreased to 236.9 percent from 245.1 percent recorded the previous week.

The oversubscription in recent weeks has partly been attributable to the high liquidity in the money market, as well as Banks’ preference towards government securities as opposed to lending in the wake of the COVID-19 pandemic which has heightened credit risk.

This has seen Bank’s holdings in Government domestic debt rising to 54.9 percent from 54.1 percent as at the start of the year.

The yields on the 91-day paper increased by 10.1 bps to 6.1 percent from 6.0 percent recorded the previous week, while that of the 182-day and 364-day papers declined by 8.4 bps and 9.4 bps to 6.4 and 7.4 percent, respectively.

The acceptance rate increased to 99.8%, from 69.8% recorded the previous week, with the government accepting Kshs 35.8 bn of the Kshs 35.9 bn worth of bids received, higher than the weekly quantum of Kshs 24.0 bn.

On the primary bond auction, the period of sale for the recently reopened 3 fixed coupon treasury bonds, FXD1/2020/05, FXD2/2018/10, and FXD1/2019/15 with effective tenors of 5 years, 8 years and 14 years respectively, closed on 21^st July 2020.

READ: 91-Day Paper Subscription Up To 948.1% As T-Bills Bloom

The issue was oversubscribed with the average subscription rate coming in at 303.0 percent, as the government received bids worth 181.8 billion shillings higher than the 60.0 billion shillings offered, mainly attributable to the high liquidity in the money markets.

Yields on the bonds came in at 10.6, 11.7 and 12.4 percent respectively, for the five, ten, and fifteen-year papers, which was in-line with our expectations.

The government rejected high bids only accepting Kshs 80.9 bn out of the Kshs 181.8 bn worth of bids received, translating to an acceptance rate of 44.5 percent.

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