T-Bill Subscription Improves To 90.4 Percent

Subscription rates for the Treasury bills improved to 90.4 percent from 41.1 percent the previous week despite the tight liquidity in the money market.

The investors shifted their preference to the 91-day paper, which had the highest subscription rate increasing to 215.7 percent from 38.8 percent recorded the previous week.

The subscription for the 182-day paper increased to 78.6 percent from 30.2 percent, while that of the 364-day paper, declined to 52.1 percent from 52.8 percent recorded the previous week.

The yields on the 91-day, 182-day, and 364-day increased by 2.0 bps, 3.0 bps, and 4.0 bps to 6.9, 7.4, and 8.3 percent respectively.

The government continued to reject expensive bids with the acceptance rate declining marginally to 98.4 percent, from 98.7 percent recorded the previous week, accepting bids worth 21.3 billion shillings out of the 21.7 billion shillings worth of bids received.

The Treasury has offered a tap sale for two 15-year bonds, FXD1/2012/15 and FXD2/2019/15, with effective tenors of 7 years and 14 years, respectively, and are seeking to raise 22.0 billion shillings.

The bonds have fixed coupon rates of 11.0 percent and 12.7 percent, respectively. The period of sale runs from 15^th Dec 2020 to 23^rd Dec 2020 or upon attainment of the amount offered.

In the money markets, 3-month bank placements ended the week at 7.4 percent, while the yield on the 91-day T-bill increased by 2.0 bps to 6.9 percent.

The average yield of Top 5 Money Market Funds remained unchanged at 10.0 percent, as recorded the previous week. The yield on the Cytonn Money Market also remained unchanged at 10.5 percent recorded the previous week.

During the week, liquidity in the market continued to tighten with the average interbank rate increasing by 1.0 percentage points, to 5.1 percent from 4.1 percent recorded the previous week.

The tightening was attributable to the end of the monthly Cash Reserve Requirement (CRR) cycle for the month of December which ended on the 14^th.

The average interbank volumes increased by 46.9 percent to 15.6 billion shillings, from 10.6 billion shillings recorded the previous week.

According to the Central Bank of Kenya’s weekly bulletin, released on 18^th December 2020, commercial banks’ excess reserves came in at 26.2 billion shillings in relation to the 4.25 percent Cash Reserve Ratio.