Last week, T-bills remained undersubscribed, with the overall subscription rate coming in at 52.8 percent, a decrease from the 90.4 percent recorded the previous week.
According to Cytonn, the undersubscription can be mainly attributed to the continued tightening of liquidity in the market evidenced by 0.7 percentage points increase in the average interbank rate to 5.8 percent from 5.1 percent, recorded last week.
Investors continued to prefer the 91-day paper, which had the highest subscription rate but the same decreased to 143.8 percent from 215.7 percent recorded the previous week.
The subscription for the 182-day paper decreased to 24.2 percent from 78.6 percent, while that of the 364-day paper, declined to 44.0 percent from 52.1 percent recorded the previous week.
The yields on the 91-day, 182-day, and 364-day increased by 3.0 bps, 4.0 bps, and 9.0 bps to 6.9, 7.4, and 8.3 percent, respectively.
The government continued to reject expensive bids with the acceptance rate declining to 80.0 percent, from 98.4 percent recorded the previous week, accepting bids worth Kshs 10.1 bn out of the Kshs 12.8 bn worth of bids received.
The Treasury has offered two new bonds, FXD1/2021/02 and IFB1/2021/16, with effective tenors of 2 years and 16 years, respectively for a total value of Kshs 25.0 bn and Kshs 50.0 bn, respectively.
The bonds will have market-determined coupon rates. The period of sale runs from 21st Dec 2020 to; 5th Jan 2021 for FXD1/2021/002 and 19th Jan 2021 for IFB1/2021/016.
In the money markets, 3-month bank placements ended the week at 7.4 percent (based on what we have been offered by various banks), 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.