T-bills remained undersubscribed last week with the overall subscription rate coming in at 96.6 percent, up from the 32.6 percent recorded the previous week.
The 91-day paper recorded the highest subscription rate, receiving bids worth 5.7 billion shillings against the offered 4.0 billion shillings.
The subscription rate stood at 141.3 percent an increase from the 14.3 percent recorded the previous week, partly attributable to the eased liquidity in the money market with the interbank rates decreasing to 4.5 from 5.5 percent the previous week.
The subscription rates for the 364-day and 182-day papers increased as well to 112.0 and 63.3 percent respectively, from 49.4 and 23.2 percent recorded the previous week.
The yields on the government papers recorded mixed performance with the 91-day and 364-day papers increasing by 7.4 bps and 7.7 bps to 7.3 and 9.4 percent, respectively, while the yield on the 182-day paper declined by 5.4 bps to 8.0bpercent.
The government accepted 23.15 billion shillings bids out of the 23.19 billion shillings worth of bids received, translating to an acceptance rate of 99.9 percent.
In the Primary Bond Market, the government released the auction results for the recently issued five-year treasury bond, FXD1/2020/005, which recorded an undersubscription of 94.6 percent.
The government sought to raise 30.0 billion shillings for budgetary support, received bids worth 28.4 billion shillings, and accepted bids worth 27.4 billion shillings, translating to a 96.6npercent acceptance rate.
The bond had a coupon rate of 11.7 percent and a market-weighted average rate of 11.3 percent. In December, the Government had re-opened two other bonds for the month of January, namely: FXD2/2018/10 and FXD1/2021/20, whose period of sale will end on 18th January 2022.
“We expect investors to prefer these longer-dated bonds since they offer higher yields of 12.5% and 13.4%, respectively, for the FXD2/2018/10 and FXD1/2021/20 respectively, compared to the 11.7% yield offered by the 5-year bond,” said Cytonn Investments.