T-Bill Subscription Spike To Hit 144%

During the week, T-bills remained oversubscribed, with the overall subscription rate coming in at 144.1 percent, an increase from the 105.8 percent recorded the previous week.

The increase in the subscription rate was partly attributable to investors’ preference for the shorter-dated papers as they sought to avoid duration risk coupled with ample liquidity in the money market with the average interbank rates declining to 5.3 from 5.6 percent recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth 13.5 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 388.4 percent, an increase from the 329.8 percent recorded the previous week.

The subscription rate for the 182-day paper also increased to 146.5 from 50.9 percent while that of the 364-day paper declined to 44.0 percent from 71.1 percent recorded the previous week.

The yields on the government papers recorded mixed performance, with the yields on the 182-day and the 91-day papers increasing by 8.8 bps and 7.4 bps to 9.4 percent and 8.3 percent, respectively, while the yields on the 364-day paper declined by 1.8 percent bps to 10.0 percent.

The government rejected expensive bids, accepting a total of 30.8 billion shillings worth of bids out of the 34.6 billion shillings worth of bids received, translating to an acceptance rate of 88.9 percent.

In the Primary Bond Market, the Central Bank of Kenya released results for the recently re-opened bonds; FXD2/2013/15 and FXD2/2018/15, with effective tenors to maturity of 6.0 years and 11.0 years and coupons of 12.0 percent and 12.8 percent respectively.

The bonds recorded an undersubscription of 26.4, partly attributable to investors’ preference for the shorter-dated papers as they sought to avoid duration risks and partly due to tightened liquidity during the period of issue.

The government issued the bonds seeking to raise 40.0 billion for budgetary support, received bids worth 10.6 billion shillings, and accepted bids worth 9.3 billion shillings, translating to an 88.0 percent acceptance rate.

The weighted average yields for the two bonds were 13.2 percent for FXD2/2013/15 and 13.9 percent for FXD2/2018/15.

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