364-Day Paper Shines Despite T-Bills Dipping

T-bills were undersubscribed last week, with the overall subscription rate coming in at 82.8 percent, down from the 102.1 percent recorded the previous week.

The 364-day paper recorded the highest subscription rate, receiving bids worth 9.7 billion shillings against the offered 10.0 billion shillings, translating to a subscription rate of 96.6 percent, a decline from the 133.9 percent recorded the previous week.

The performance is partly attributable to investors’ preference for the longer-dated paper, which offers a higher yield of 9.8 percent compared to the 8.1 and 7.3 percent yields offered by the 182-day and 91-day papers, respectively.

The subscription rate for the 182-day paper increased to 82.4 percent, from 58.1 percent recorded the previous week while that of the 91-day paper declined to 49.5, from 132.4 percent recorded the previous week.

The yields on the government papers recorded a mixed performance with yields on the 182-day and 91-day papers increasing by 6.1 bps and 4.6 bps to 8.1 and 7.3 percent, respectively, while yields on the 364-paper declined by 0.8 bps to 9.8 percent.

The government continued rejecting expensive bids, accepting bids worth Kshs 18.8 bn out of the Kshs 19.9 bn worth of bids received, translating to an acceptance rate of 94.8%.

In the Primary Bond Market, the Central Bank of Kenya re-opened the three recently issued bonds on tap sale; 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, and coupons of 11.3, 12.8, and 13.9 percent respectively.

The Government sought to raise Kshs 31.5 bn for budgetary support, following an undersubscription of the initial offers, which had a total subscription rate coming in at 81.9 percent, partly attributable to the tightened liquidity in the money markets during the bonds’ sale period, with the interbank rate averaging 5.6%, in comparison to an average rate of 4.7 percent in February 2022.

The tap sale was undersubscribed, with the overall subscription rate coming in at 79.0 percent, partly attributable to the short bidding period.

The government received bids worth 24.9 billion shillings, lower than the 31.5 billion shillings offered, and continued to reject expensive bids, accepting only 23.9 billion shillings. This translated to an acceptance rate of 95.9 percent.

The weighted average yields for the three bonds were 12.0% for FXD1/2021/05, 13.7% for FXD1/2020/15, and 14.0 percent for FXD1/2021/25.

Read More: T-Bills Strike Back With A Oversubscription After Days In The Red