T-Bill Subscription At 40.9%, Any Hope This Week?

T-bills remained undersubscribed, with the overall subscription rate coming in at 40.9 percent last week, a decline from 42.2 percent recorded the previous week.

The continued undersubscription is attributable to investors shifting to the bond market in search of higher yields according to data compiled by Cytonn Investments.

The 91-day paper recorded the highest subscription rate, receiving bids worth 3.4 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 85.6 percent, an increase from 66.0 percent recorded the previous week.

The subscription rate for the 182-day paper decreased to 39.6 percent, from 53.4 percent recorded the previous week, while the subscription rate for the 364-day paper increased to 24.4 percent, from 21.6 percent recorded the previous week.

The yields on the 91-day, 182-day, and 364-day papers increased by 4.0 bps, 3.4 bps, and 7.9 bps to 6.9, 7.3, and 8.0 percent, respectively.

The government accepted 9.78 billion shillings out of the 9.82 billion shillings bids received, translating to an acceptance rate of 99.5 percent.

In the Primary Bond Market, the government re-opened three bonds namely; FXD1/2013/15, FXD1/2019/15, and FXD1/2021/25 for the month of October, which recorded a subscription rate of 92.5 percent.

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The government sought to raise 60.0 billion shillings for budgetary support, received bids worth 55.5 billion shillings, and accepted bids worth 52.0 billion shillings, translating to a 93.8 percent acceptance rate.

The undersubscription is attributable to tightened liquidity in the market, with the average interbank rates increasing to 6.3 percent, from 3.3 percent recorded the first week of September.

Investors preferred the longer-tenure issue i.e. FXD1/2021/25, which received bids worth 28.7 billion shillings, representing 51.7 percent of the total bids received.

The coupons for the three bonds were; 11.3, 12.3, and 13.9 percent, and the weighted average yield for the issues were; 11.9, 12.8, and 13.8 percent, for FXD1/2013/15, FXD1/2019/15, and FXD1/2021/25, respectively.

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