T-bills were undersubscribed, with the overall subscription rate coming in at 54.4 percent, down from 116.3 percent recorded the previous week.
The dipping of the T-Bills was partly attributable to the tightened liquidity in the money market with the average interbank rates rising to 4.6 percent, from the 4.4 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 97.2 percent, a decrease from the 121.9 percent recorded the previous week.
The subscription rate for the 182-day and 91-day papers decreased to 28.5 and 12.4 percent, from 102.5 and 136.9 percent, respectively, recorded the previous week.
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The yields on the government papers recorded mixed performance, with the yields on the 364-day and 182-day papers increasing by 0.2 bps and 6.9 bps to 8.9 and 9.9 percent, respectively while the yields on the 91-day paper declined by 1.4 bps to 7.7 percent.
The government continued to reject expensive bids accepting only 12.5 billion shillings worth of bids out of 13.1 billion shillings received, translating to an acceptance rate of 95.8 percent.
During the week, the government issued a new 18-year infrastructure bond, IFB1/2022/18 with a tenor of 18 years in a bid to raise 75.0 billion shillings for funding Infrastructure projects.
The period of sale runs from 23rd May 2022 to 7th June 2022. Key to note, the bond’s coupon rate will be market-determined. We anticipate an oversubscription and a higher acceptance rate given the relatively ample liquidity in the money market coupled with the attractive tax-free nature of the bond and expected high coupon rate.
“Our recommended bidding range for the bond is 12.8-13.2 percent within which bonds of a similar tenor are trading,” said Cytonn Investments in their latest report.
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