T-Bills Dip As Investors Rush For Short-term Papers

T-bills were undersubscribed, with the overall subscription rate coming in at 97.0%, a decline from the 153.0% recorded the previous week, partly attributable to the concurrent bond issue in the primary bond market.

Investor’s preference for a shorter 91-day paper persisted, with the paper receiving bids worth Kshs 9.9 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 248.4%, from 675.4% recorded the previous week.

It is worth noting that the 91-day paper’s rate has been increasing for the sixteenth consecutive week, with the rate quickly heading to 9.0% levels which has consistently countered the need to invest in the longer tenure papers.

The subscription rate for the 182-day paper increased to 113.9% from 34.8% while that of the 364-day-paper declined to 19.6%, from 62.3% recorded the previous week.

The yields on the government papers recorded mixed performance, with the yields on the 182-day and 91-day papers increasing by 1.6 bps and 4.0 bps to 9.6% and 9.0%, respectively, while the yields on the 364-day paper declined by 0.2 bps to 9.9%.

“We however believe that the 91-day paper rates are not sustainable and this will likely lead to a reversal in the rates in the short term,” said Cytonn Investments.

The government continued to reject expensive bids, accepting a total of Kshs 17.4 bn worth of bids out of the Kshs 23.3 bn worth of bids received, translating to an acceptance rate of 74.6%.

In the primary bond market, the Central Bank of Kenya released the auction results for the recently re-opened bonds; FXD1/2022/10 and FXD1/2022/15, with tenors to maturity of 10 years and 15 years, and coupons of 13.5% and 13.9%, respectively.

In line with our expectations, the bonds recorded an undersubscription of 92.3% despite the ample liquidity in the money market and the eased tensions in the country following the peaceful elections.

The government issued the bonds seeking to raise Kshs 50.0 bn for budgetary support, received bids worth Kshs 46.1 bn, and accepted bids worth Kshs 39.0 bn translating to an 84.6% acceptance rate.

The weighted average yields were 13.9% for the FXD1/2022/10 and 14.0% for FXD1/2022/15.

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