T-Bills Slip Back In The Red As December Kicks Off

T-bills remained undersubscribed, with the overall subscription rate coming in at 87.9%, an increase from the 57.9% recorded in October 2021.

The increase in the subscription rate is partly attributable to the ample liquidity in the money market, with the average interbank rate declining to 5.0%, from the 5.3% recorded in October 2021.

Overall subscription rates for the 91-day, 182-day and 364-day papers came in at 112.0%, 64.8% and 101.4%, an increase from 97.5%, 62.1% and 37.9%, respectively, in October 2021.

The yields on the 91-day, 182-day, and 364-day papers increased by 15.0 bps, 30.0 bps, and 59.0 bps to 7.1%, 7.7%, and 8.7%, respectively.

For the month of November, the government accepted a total of Kshs 98.2 bn, out of the Kshs 105.5 bn worth of bids received, translating to a 93.0% acceptance rate.

During the week, T-bills recorded an undersubscription, with the overall subscription rate coming in at 95.2%, an increase from the 64.6% recorded the previous week, partly attributable to the ample liquidity in the money markets.

The 91-day paper recorded the highest subscription rate, receiving bids worth Kshs 8.7 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 217.3%, a significant increase from the 98.4% recorded the previous week.

The oversubscription is partly attributable to investors having a bias towards the shorter-dated paper in order to avoid duration risk given the current rising political temperatures preceding the elections in August 2022.

The subscription rate for the 364-day paper declined to 89.0%, from 90.4% recorded the previous week, while the subscription rate for the 182-day paper increased to 52.5%, from 25.2% recorded the previous week.

The yields on the 91-day, 182-day, and 364-day papers increased by 5.1 bps, 1.9 bps and 7.2 bps, to 7.2%, 7.9% and 9.0%, respectively.

The government continued to reject expensive bids accepting Kshs 19.5 bn of the Kshs 22.8 bn worth of bids received, translating to an acceptance rate of 85.6%.

In the Primary Bond Market, the government re-opened one bond, FXD1/2019/20, and issued a new 5-year bond, FXD1/2021/5, for the month of November.

The bonds recorded an oversubscription of 168.3%, attributable to the ample liquidity in the market coupled with the bond’s attractive yields.

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

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

Investors preferred the shorter-tenure issue i.e. FXD1/2021/5, which received bids worth Kshs 66.6 bn, representing 79.1% of the total bids received, owing to the higher returns on a risk-adjusted basis.

For the month of December, the government has re-opened two bonds, namely; FXD4/2019/10 and FXD1/2018/20, with effective tenors of 8.0 years, and 16.4 years, respectively, in a bid to raise Kshs 40.0 bn for budgetary support.

The period of sale for the issue runs from 22^nd November to 7^th December 2021. The coupon rates are 12.3% and 13.2% for FXD4/2019/10 and FXD1/2018/20, respectively.