T-Bills Back In The Red Again After Smiling Once

T-bills recorded an undersubscription last with the overall subscription rate coming in at 82.9 percent, a decline from the oversubscription of 115.0 percent recorded last week.

The undersubscription was partly attributable to the tightening liquidity in the money markets as evidenced by the interbank rate increasing during the week to 5.6 percent, from 5.4 percent recorded last week.

Investors’ continued interest in the 364-day paper saw it record the highest subscription rate at 166.0 percent, an increase from 150.8 percent recorded the previous week, as the paper has an attractive rate of 9.3 percent, which is higher than the rate for most bank placements.

The subscription rate for the 91-day and 182-day papers declined to 82.6 and 30.7 percent, from 135.6 and 71.8 percent, respectively.

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The yields on all three papers rose; with the 364-day, 182-day, and 91-day papers increasing by 4.6 bps, 0.6 bps, and 1.6 bps to 9.3, 7.9, and 7.1 percent, respectively.

The government continued to reject expensive bids by accepting only 19.0 billion shillings of the 23.0 billion shillings bids received, translating to an acceptance rate of 82.9 percent.

In the Primary Bond market, the Central Bank of Kenya opened bidding for an infrastructure bond IFB1/2021/18, with a tenor of 18 years and the coupon is market-determined.

The government is seeking to raise 60.0 billion shillings to fund Infrastructure projects in the FY’2020/21 budget estimates.

The bond will be on offer from 26/03/2021 to 06/04/2021. “Given the tax-free nature of the bond coupled with the government’s increased appetite for domestic borrowing to bridge the budget deficit, we anticipate an oversubscription and a high acceptance rate.”

In the money markets, 3-month bank placements ended the week at 7.9 percent, while the yield on the 91-day T-bill increased marginally by 1.6 bps to 7.1 percent.

The average yield of the Top 5 Money Market Funds remained unchanged at 10.2 percent as was recorded last week.

The yield on the Cytonn Money Market increased marginally during the week by 0.1% points to come in at 10.9%, from 10.8 percent recorded the previous week.