T-Bills Are Back With An Oversubscription Of 115.9%

By Cytonn Investments / Published November 9, 2020 | 8:34 am



T-Bill, t-bills

Last week, T-bills were oversubscribed, with the overall subscription rate coming in at 115.9 percent, up from 72.1 percent the previous week, driven by high liquidity in the money markets.

The highest subscription rate was in the 364-day paper, which came in at 210.0 percent, up from 110.1 percent recorded the previous week.

The subscription for the 182-day paper increased to 45.5 percent from 33.1 percent, while that of the 91-day paper dropped to 56.9 percent from 74.9 percent recorded the previous week.

The yields on the 182-day and 364-day both increased by 0.1 percentage points to 7.1 and 8.0 percent respectively, from 7.0 and 7.9 percent while the 91-day paper remained unchanged at 6.7 percent.

The acceptance rate increased to 99.2 percent from 95.5 percent recorded the previous week, with the government accepting bids worth 27.6 billion shillings out of the 27.8 billion shillings worth of bids received.

The Treasury plans to re-open two bonds, a 15-year, and 20-year bond, FXD2/2013/15, and FXD2/2018/20, with effective tenors of 7.5 and 17.4 years, respectively for a total value of 40.0 billion shillings. The bonds have fixed coupon rates of 12.0 percent for the 15-year and 13.2 percent for the 20-year.

The period of sale runs from 4th November 2020 to 17th November 2020 and our recommended bidding ranges are 12.5 – 12.7 percent for FXD2/2013/15 and 12.9% – 13.1% for FXD2/2018/20, given that bonds with a similar tenor are currently trading at 12.6 and 13.0 percent.

The treasury has offered a tap sale for a 25-year bond, FXD1/2018/25, with a fixed coupon rate of 13.4 percent, and an effective tenor of 23 years, for a total amount of 20.0 billion shillings.

In the money markets, 3-month bank placements ended the week at 7.2 percent, while the yield on the 91-day remained unchanged at 6.7 percent recorded the previous week.

The average yield of the Top 5 Money Market Funds declined by 0.1 percentage points to 10.0 percent from 10.1 percent as recorded the previous week.

The yield on the Cytonn Money Market declined by 0.1 percentage points to 10.5 percent from 10.6 percent as recorded the previous week.

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