T-Bills Dip Again After Popping Up For A Week

T-bills recorded an undersubscription last week with the overall subscription rate declining to 69.3 percent, from the 131.1 percent recorded the previous week, attributable to investors shifting to the bond market in search of higher yields.

The 91-day paper recorded the highest subscription rate, receiving bids worth 3.99 billion shillings against the offered 4.00 billion shillings, translating to a subscription rate of 99.8 percent, an increase from the 85.9 percent recorded the previous week.

The subscription rate for the 364-day and 182-day papers decreased to 74.3 and 52.0 percent, from 192.4 and 87.9 percent, respectively, recorded the previous week.

The yields on the 182-day and 364-day papers increased by 12.9 bps and 12.4 bps, to 7.7 and 8.8 percent, respectively, while that of the 91-day paper declined by 2.7 bps to 7.1 percent.

The government accepted 16.5 billion shillings of the 16.6 b million shillings worth of bids received, translating to an acceptance rate of 99.4 percent.

In the Primary Bond Market, the government re-opened two bonds namely; FXD1/2019/20 and FXD1/2021/5 for the month of November, which recorded an oversubscription of 168.3 percent.

The government sought to raise Kshs 50.0 bn for budgetary support, received bids worth 84.2 billion shillings, and accepted bids worth 69.5 billion shillings, translating to an 82.6 percent acceptance rate.

The oversubscription of the bonds could be attributed to the ample liquidity in the market as well as their attractive yields.

Investors preferred the shorter-tenure issue i.e. FXD1/2021/5, which received bids worth 66.6 billion shillings, representing 79.1 percent of the total bids received.

The coupons for the two bonds were; 12.9 and 11.3 percent, and the weighted average yield for the issues were; 13.5 percent and 11.3 percent, for FXD1/2019/20 and FXD1/2021/5, respectively.

At the same time, liquidity in the money markets remained ample, with the average interbank rate coming in at 4.7 percent, unchanged from the previous week, partly attributable to government payments which partly offset tax remittances.

The average interbank volumes traded increased by 90.5% to Kshs 9.9 bn, from Kshs 5.2 bn recorded the previous week.