T-Bills Still In The Red As September Races Towards The End

By Soko Directory Team / Published September 27, 2021 | 8:41 am

KEY POINTS

T-bills remained undersubscribed, with the overall subscription rate coming in at 42.3 percent last week, down from the 54.6 percent recorded the previous week.

T-bills remained undersubscribed, with the overall subscription rate coming in at 42.3 percent last week, down from the 54.6 percent recorded the previous week.

The 91-day paper recorded the highest subscription rate, receiving bids worth 4.9 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 119.8 percent, an increase from the 83.8 percent recorded the previous week.

The subscription rate for the 182-day paper declined to 46.7 percent from 68.0 percent, while that of the 364-day paper declined significantly to 7.0 percent, from the 29.5 percent recorded the previous week.

The yields on the 91-day, 182-day, and 364-day papers increased by 2.6 bps, 3.2 bps, and 4.5 bps to 6.9, 7.3, and 7.9 percent, respectively.

The government accepted all the Kshs 10.2 bn worth of bids received, translating to an acceptance rate of 100.0 percent.

In the Primary Market, the government reopened three bonds, FXD1/2013/15, FXD3/2019/15, and FXD1/2021/25, with effective tenors of 6.4 years, 12.9 years, and 24.7 years, respectively, in a bid to raise 60.0 billion shillings for budgetary support.

The coupon rates are 11.3 percent for FXD1/2013/15, 12.3% for FXD3/2019/15, and 13.9 percent for FXD1/2021/25. “We expect investors to prefer the longer-dated papers, FXD3/2019/15 and FXD1/2021/25, as they search for higher yields.”

The bonds are currently trading in the secondary market at yields of 11.7, 12.7, and 13.5 percent, for FXD1/2013/15, FXD3/2019/15, and FXD1/2021/25, respectively.

“Our recommended bidding range for the three bonds are 11.5%-11.8% for FXD1/2013/15, 12.3%-12.7% for FXD3/2019/15 and 13.2%-13.5% for FXD1/2021/25. The period of the sale runs until 5th October 2021,” said Cytonn.

In the money markets, 3-month bank placements ended the week at 7.7 percent (based on what we have been offered by various banks), while the yield on the 91-day T-bill increased by 2.6 bps to 6.9 percent.

The average yield of the Top 5 Money Market Funds increased marginally by 0.1 percentage points to 9.9 percent, from 9.8 percent recorded the previous week.

The yield on the Cytonn Money Market Fund remained unchanged at 10.6% as was recorded the previous week.

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