T-Bills defied the ongoing Covid-19 pandemic to closed the month of July with an oversubscription. The overall subscription rate came in at 243.1 percent, compared to 233.4 percent recorded in the month of June.
According to Cytonn Report, the oversubscription is partly attributable to increased liquidity in the money market with the average interbank rate coming in at 2.2 percent for the month of July coupled.
During the month, Kenyan commercial banks preferred government securities as opposed to lending with their holdings in government securities rising to 54.9 percent from 54.3 percent at the beginning of the year.
The subscription rates for the 91-day paper rose to 574.7 percent from 324.0 percent recorded in June.
The subscription rates for the 182-day and 364-day papers, on the other hand, declined, coming in at 137.5 percent and 216.0 percent, lower than the 187.2 percent and 243.3 percent recorded in June, respectively.
“We note that the 91-day paper continued to receive the most interest from investors, having recorded the highest subscription rate of 574.7 percent as investors preferred holding the shorter-dated paper due to the uncertainty in the market,” said Cytonn in their weekly report.
During the month, there were significant declines in yield for the 182-day and 364-day papers which have declined by 1.7 percentage points and 2.4 percentage points, respectively.
The Central Bank remained disciplined in rejecting expensive bids in order to ensure the stability of interest rates as evidenced by the decline in yields on the 91-day, 182-day and 364-day paper to 6.2, 6.6, and 7.5 percent from 7.1, 7.8, and 8.8 percent recorded in June.
The T-bills acceptance rate came in at 66.9 percent during the month, compared to 30.9 percent recorded in June, with the government accepting a total of 195.0 billion shillings of the 291.7 billion shillings worth of bids received.
During the week, T-bills remained oversubscribed, with the subscription rate coming in at 118.7 percent, down from 149.6 percent the previous week.
The subscription rate for the 91-day and 182-day papers increased to 396.5 and 24.7 percent respectively, from 270.4 and 13.9 percent recorded the previous week, respectively.
The subscription rate for the 364-day paper, however, fell to 101.5 percent from 236.9 percent recorded the previous week.
The yields on the 91-day and 364-day papers remained unchanged at 6.1 percent and 7.4 percent respectively, similar to what was recorded the previous week.
The yields of the 182-day paper increased marginally to close at 6.5 percent, from the 6.4 percent recorded the previous week.
The acceptance rate declined to 82.8 percent, from 99.8 percent recorded the previous week, with the government accepting 23.6 billion shillings of the 28.5 billion shillings bids received.