T-Bills Roar Back To Oversubscription After Being In The Red

T-bills recorded an oversubscription last week, with the overall subscription rate coming in at 115.0 percent, an increase from the undersubscription of 94.3 percent recorded last week.

The oversubscription according to last week’s report by Cytonn Investments, was a result of improved liquidity in the money markets due to government payments.

The interbank rate increased during the week to 5.4 percent, from 5.0 percent last week. The highest subscription rate was in the 364-day paper of 150.8 percent, an increase from 121.9 percent recorded the previous week.

The subscription rate for the 91-day and 182-day papers also increased to 135.6 and 71.0 percent, from 108.8 and 60.8 percent respectively from the previous week.

The yields on all three papers rose; with the 364-day, 182-day, and 91-day papers increasing by 6.9 bps, 5.2 bps, and 4.7 bps to 9.2, 7.9, and 7.1 percent, respectively.

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The government continued to reject expensive bids by accepting only 23.3 billion shillings of the 27.6 billion shillings offered, translating to an acceptance rate of 84.4 percent.

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 to 7.1 percent, from 7.0 percent recorded last week.

The average yield of the Top 5 Money Market Funds increased by 0.3 percentage points to come in at 10.2 percent, from 9.9 percent recorded last week.

The yield on the Cytonn Money Market increased marginally during the week by 0.3 percentage points to come in at 10.8 percent, from 10.5 percent recorded the previous week.

Liquidity in the money market remained stable but the average interbank rate increased to 5.4 percent, from the 5.0 percent recorded the previous week.

“This was attributable to the payments made towards the settlements of the recently issued bonds coupled with tax receipts which were partly offset by government payments,” said Cytonn.

The average interbank volumes decreased by 1.1 percent to 12.9 billion shillings, from 13.0 billion shillings recorded the previous week.

According to the Central Bank of Kenya’s weekly bulletin released on 19th March 2021, commercial banks’ excess reserves came in at 21.6 billion shillings in relation to the 4.25 percent Cash Reserve Ratio.