T-Bill Subscription Hit The Lowest As September Nears The End

Last week, T-bills remained undersubscribed, with the subscription rate coming in at 29.7 percent down from 70.4 percent the previous week.

According to Cytonn Investments, the undersubscription can be attributed to the tightening liquidity conditions in the money markets with the average interbank rate coming in at 3.3 percent from the 2.7percent recorded last week.

The highest subscription rate was in the 364-day paper, which came in at 47.3 percent, down from 89.2 percent recorded the previous week.

The subscription for the 91-day and 182-day paper also fell to 28.0 and 12.7 percent respectively from 151.3 and 19.2 percent recorded the previous week.

The yields on the 91-day paper remained unchanged at 6.3 percent, while that of the 182-day and 364-day paper increased marginally to 6.8 and 7.7 percent, respectively from 6.7 and 7.6 percent recorded the previous week.

The acceptance rate decreased to 93.4 percent from 100.0 percent recorded the previous week, with the government accepting bids worth 6.7 billion shillings out of the 7.1 billion shillings worth of bids received.

In the money markets, 3-month bank placements ended the week at 7.2 percent (based on what we have been offered by various banks), while the yield on the 91-day T-bill remained unchanged at 6.3 percent.

The average yield of Top 5 Money Market Funds increased marginally to 10.1 percent, from 10.0percent the previous week.

The yield on the Cytonn Money Market declined marginally to close at 10.5 percent, down from the 10.6 percent recorded the previous week.

Liquidity

The money markets tightened during the week, with the average interbank rate increasing to 3.3 percent from 2.7 percent recorded the previous week, mainly supported by tax remittances which more than offset government payments.

The average interbank volumes declined by 19.0percent to 10.4 billion shillings from 12.8 billion shillings recorded the previous week.

According to the Central Bank of Kenya, commercial banks’ excess reserves came in at 14.1 billion shillings in relation to the 4.25percent Cash Reserve Ratio.

READ: T-Bills Still Crawling At 52.3% Despite High Liquidity

Kenya Eurobonds

The yields on all Eurobonds increased significantly during the week, pointing to the perception of increased risk by foreign investors on the country’s outlook.

During the week, according to Reuters, the yield on the 10-year Eurobond issued in June 2014 increased by 0.7 percentage points to 6.2 percent, from 5.5 percent the previous week.

During the week, the yields on the 10-year and 30-year Eurobonds both increased by 0.6 percent and 0.5 percent, respectively to close at 7.4 and 8.6 percent from the 6.8 and 8.1percent recorded the previous week.

During the week, the yields on the 2019 dual-tranche Eurobond issue with 7-years increasing by 0.8 percentage points to 7.3 percent from 6.5 percent the previous week.

The 12-year Eurobond also increased by 0.6% points to close at 8.1 percent, from the 7.5 percent recorded the previous week.

READ: Yield On Kenyan Eurobonds Dip As Investor Confidence Returns