T-Bills Remained In The Red In July

T-bills remained undersubscribed, with the overall subscription rate coming in at 97.4 percent, down from 79.2 percent recorded in June 2022.

The increase in the subscription rate was partly attributable to investors preference for the shorter dated papers as they sought to avoid duration risk.

The overall subscription rates for the 91-day and 182-day papers increased to 278.1 and 74.8 percent from 142.3 and 58.6 percent, respectively, while that of the 364-day paper declined to 47.6 percent from 74.4 percent recorded in June 2022.

The average yields on the 364-day, 182-day and 91-day papers increased by 2.4 bps, 21.9 bps and 30.5 bps to 10.0, 9.3, and 8.2 percent, respectively.

For the month of July, the government continued to reject expensive bids, accepting a total of 88.1 billion shillings out of the 93.5 billion shillings worth of bids received, translating to an acceptance rate of 94.3 percent.

During the week, T-bills were undersubscribed, with the overall subscription rate coming in at 82.1 percent, a decline from the 144.1 percent recorded the previous week.

The decrease in the subscription rate was partly attributable to the tightened liquidity in the money market with the average interbank rates increasing to 5.4 from 5.3 percent recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 14.1 bn against the offered 4.0 billion shillings, translating to a subscription rate of 351.9 percent, down from the 388.4 percent recorded the previous week.

The subscription rate for the 182-day and 364-day papers declined to 32.5 and 23.8 percent from 146.5 and 44.0 percent, respectively, recorded the previous week.

The yields on the government papers recorded mixed performance, with the yields on the 91-day paper increasing by 7.7 bps to 8.4 percent, while the yields on the 364-day and 182-day papers declined by 2.2 bps and 0.1 bps to 9.9 and 9.4 percent, respectively.

The government rejected expensive bids, accepting a total of 18.3 billion shillings worth of bids out of the 19.7 billion shillings worth of bids received, translating to an acceptance rate of 92.9 percent.

In the primary bond market, the government released the auction results for the two bonds, FXD2/2013/15 and FXD2/2018/15, that were issued for the month of July in a bid to raise Kshs 40.0 bn for budgetary support.

The bonds were undersubscribed, receiving bids worth Kshs 10.6 bn against the offered 40.0 billion shillings, translating to a subscription rate of 26.4 percent.

The government also released the tap sale results for the infrastructure bond; IFB1/2022/018 issued to raise 20.0 billion shillings for funding infrastructure projects.

The bond was also undersubscribed, receiving bids worth 6.4 billion shillings, translating to a subscription rate of 32.1 percent.

The average tenor for the July bonds came in at 16.0 years higher than June’s 12.0 years average tenor. The weighted average rate of accepted bids for the July bonds was 13.6 percent, 0.4 percentage points higher than the 13.2 percent average rate for the June bonds, reflective of the increasing perceived risk as we approach the August elections.

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