T-Bills Slump Back Into The Red After Shining For Two Weeks

T-bills recorded an undersubscription, with the overall subscription rate coming in at 94.3 percent down from 141.0 percent recorded the previous week.

The under-subscription was attributed to the concurrent bond issue coupled with the tightened liquidity in the money markets.

The highest subscription rate was in the 364-day paper, which declined to 121.9 percent from 190.2 percent recorded the previous week.

The subscription rate for the 91-day and 182-day papers also declined to 108.8 and 60.8 percent, from 176.1 and 77.7 percent recorded the previous week, respectively.

The yield on the 91-day paper remained unchanged at 7.0 percent, while the yields on 364-day and 182-day papers rose by 7.3 bps and 6.7 bps to 9.1 and 7.8 percent, respectively. The government accepted 100.0 percent of bids received, amounting to 22.6 billion shillings.

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On the Primary Bond Market, there was an undersubscription for this month’s bond offers, with the overall subscription rate coming in at 97.4 percent, attributable to the relatively tight but recovering money market liquidity.

The Central Bank of Kenya had re-opened 2 bonds, FXD1/2019/10 and FXD2/2018/20 with effective tenors of 8.0 and 17.4 years, and coupons of 12.4 and 13.2 percent, respectively, in a bid to raise 50.0 billion shillings for budgetary support.

The government received bids worth 48.7 billion shillings, and accepted only 48.3 billion shillings, translating to an acceptance rate of 99.2 percent.

Investors preferred the 20-year bond issue i.e. FXD2/2018/20, which received bids worth 32.8 billion shillings, representing 65.6 percent of the total bids received.

The weighted average rate of accepted bids for the two bonds came in at 12.4 and 13.4 percent, for FXD1/2019/10 and FXD2/2018/20, respectively.

In the money markets, 3-month bank placements ended the week at 7.9 percent while the yield on the 91-day T-bill remained unchanged at 7.0 percent, the same as recorded last week.

The average yield of the Top 5 Money Market Funds declined marginally by 0.1 percentage points to come in at 9.9 percent, from 10.0 percent recorded last week.

The yield on the Cytonn Money Market also declined during the week by 0.4 percentage points to come in at 10.5 percent, from 10.9 percent recorded the previous week.