T-bills were undersubscribed, with the overall subscription rate coming in at 63.6 percent, down from the 111.5 percent recorded the previous week.
The undersubscription is partly attributable to the concurrent Kenya Mortgage Refinance Mortgage Company (KMRC) bond issue which recorded a subscription rate of 478.6 percent as investors preferred the higher yield of 12.5 percent on offer.
The 364-day paper recorded the highest subscription rate, receiving bids worth 9.2 billion shillings against the offered 10.0 billion shillings, translating to a subscription rate of 92.2 percent, a decline from the 151.3 percent recorded the previous week.
The subscription rate for the 182-day paper declined to 40.3, from 101.5 percent recorded the previous week, while that of the 91-day paper increased to 50.3, from 37.2 percent recorded last week.
The yields on the government papers recorded mixed performance, with the yields on the 364-day and the 91-day papers increasing by 4.0 bps and 0.4 bps to 9.8 and 7.3 percent, respectively, while that of the 182-day paper declined by 1.3 bps to 8.1 percent.
The government accepted bids worth 12.7 billion shillings, out of the 15.3 billion shillings worth of bids received, translating to an acceptance rate of 83.1 percent.
In the Primary Bond Market, the government reopened three bonds, FXD1/2021/05, FXD1/2020/15, and FXD1/2021/25, with tenors to maturity of 4.7 years, 12.9 years, and 24.2 years, respectively, in a bid to raise 50.0 billion shillings for budgetary support.
The period of sale for the issue runs from 24th February 2022 to 8th March 2022. The coupon rates are 11.3, 12.8, and 13.9 percent for FXD1/2021/05, FXD1/2020/15, and FXD1/2021/25, respectively.
“We expect investors to prefer the longer dated paper, FXD1/2021/25, in search of higher yields. The bonds are currently trading in the secondary market at yields of 11.6, 13.0, and 13.7 percent, for FXD1/2021/05, FXD1/2020/15, and FXD1/2021/25. Our recommended bidding range for the three bonds is 11.4-11.8 percent for FXD1/2021/05, 12.8-13.2 percent for FXD1/2020/15, and 13.5%-13.9% for FXD1/2021/25 within which range bonds of a similar tenor are trading at,” said Cytonn Investments.
Read More: T-Bills Strike Back With A Oversubscription After Days In The Red