Last week, T-bills remained undersubscribed, with the overall subscription rate coming in at 41.1 percent, down from 45.5 percent the previous week.
This undersubscription can be attributed to the concurrent primary bond issue where the government reopened two bonds namely, FXD1/2012/15 and FXD2/2019/15, which recorded an overall subscription rate of 60.9 percent down from 140.0 percent recorded in the month of November.
Due to the tightening liquidity in the market, the average interbank rate increased by 0.4 percentage points to 4.3 percent from 3.9 percent, recorded last week.
The highest subscription on treasury bills was in the 364-day paper, which increased marginally to 52.8 percent from 52.6 percent recorded the previous week.
The subscription for the 182-day paper increased to 30.2 percent from 26.9 percent, while that of the 91-day paper, declined to 38.8 percent from 74.3 percent recorded the previous week.
The yields on the 91-day, 182-day, and 364-day increased by 4.0 bps, 3.0 bps, and 4.2 bps to 6.9, 7.4, and 8.2 percent, respectively.
The government continued to reject expensive bids but the acceptance rate increased to 98.7 percent, from 90.6 percent recorded the previous week, with bids worth 9.7 billion shillings accepted out of the 9.9 billion shillings worth of bids received.
During the month of December, the Central Bank of Kenya re-opened 2 bonds; FXD1/2012/15 and FXD2/2019/15 with coupons of 11.0 and 12.7 percent, respectively, and effective tenors of 6.5 years and 13.8 years, respectively.
There was low demand for the bond issue, with the overall subscription rate for the two bonds coming in at 60.9 percent, partly due to the relatively tightening liquidity in the market.
The government offered to collect 40.0 billion shillings but received bids worth 24.3 billion shillings and accepted only 18.3 billion shillings.
Investors preferred the longer-term paper i.e. FXD2/2019/15, which received bids worth 15.1 billion shillings, representing 62.0 percent of the total bids received.
The weighted average rate of accepted bids for FXD1/2012/15 and FXD2/2019/15 came in at 11.5 percent and 12.8 percent, compared to 11.6 and 12.7 percent when they were last issued in the primary market, and 11.5 and 12.2 percent in the secondary market, respectively.