T-Bills Oversubscribed But Lower Than The Previous Week

Last week, T-bills were oversubscribed, with the overall subscription rate coming in at 104.2 percent down from 126.6 percent the previous week.

The slight drop in subscription was mainly attributable to the focus on the primary bond auction, where there were two bonds re-opened namely, FXD2/2013/15 and FXD1/2018/20, which recorded a higher overall subscription rate of 140.0 percent.

The highest subscription rate was in the 91-day paper, which came in at 139.6 percent, down from 220.3 percent recorded the previous week.

The subscription rate for the 364-day and 182-day papers both dropped to 129.3 and 65.0 percent respectively, from 135.4 and 80.3 percent recorded the previous week.

The yields on all three papers, 91-day, 182-day, and 364-day increased marginally by 3.2 bps, 3.8 bps, and 5.2 bps to 6.7, 7.2, and 8.1 percent.

The acceptance rate declined slightly to 96.6 percent from 97.7 percent, recorded the previous week, with the government accepting bids worth 24.2 billion shillings out of the 25.0 billion shillings worth of bids received.

On the Primary bond market, there was a high demand for this month’s bond offers, with the overall subscription rate for the two bonds coming in at 140.0 percent, partly supported by the favorable liquidity in the market, and financial institutions bias towards the fixed income market in this period of economic uncertainty.

The Central Bank of Kenya had re-opened 2 bonds the FXD2/2013/15 and FXD1/2018/20 with coupons of 12.0 percent and 13.2 percent and effective tenors of 7.5 years and 17.4 years, respectively.

The government received bids worth 56.0 billion shillings, higher than the 40.0 billion shillings offered, and accepted only 53.7 billion shillings.

Investors preferred the longer-term paper i.e. FXD1/2018/20, which received bids worth 28.9 billion shillings, representing 51.2 percent of the total bids received.

The weighted average rate of accepted bids for the two bonds came in at 11.4 and 13.3 percent, for FXD2/2013/15 and FXD1/2018/20, respectively.

The government rejected high bids only accepting 53.7 billion shillings out of the 56.0 billion shillings worth of bids received, translating to an acceptance rate of 96.0 percent.

In the money markets, 3-month bank placements ended the week at 7.2 percent, while the yield on the 91-day increased marginally by 3.2 bps to close at 6.7 percent.

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

The yield on the Cytonn Money Market Fund remained unchanged at 10.5 percent, similar to what was recorded the previous week.

READ: T-Bills End The Week At 131.6% From 110.0% Previously