T-Bills Jump From Lowest To Highest Subscription In A Week

During the week, T-bills were oversubscribed, with the overall subscription rate coming in at 110.0%, up from the 38.8 percent recorded the previous week.

The oversubscription was partly attributable to the eased liquidity in the money market, with the average interbank rate decreasing to 5.3 percent from 5.6 percent recorded in the previous week.

Investor’s preference for the shorter 91-day paper persisted, with the paper receiving bids worth 18.1 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 452.2 percent, up from 128.2 percent recorded the previous week.

The subscription rate for the 364-day and 182-day papers also increased to 14.3 percent and 68.8 percent from 11.5 percent and 30.5 percent respectively, 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 0.8 bps and 8.4 bps to 9.6 and 9.2 percent, respectively, while the yields on the 364-day paper remained unchanged at 9.9 percent.

In the Primary Bond Market, the Central Bank of Kenya released results for the recently re-opened bonds; FXD1/2017/10 and FXD1/2020/15 with effective tenors to maturity of 4.9 years and 12.3 years respectively.

As per our expectations, the bonds recorded an undersubscription of 47.0 percent, partly attributable to investors’ preference for the shorter-dated papers as they sought to avoid duration risk.

The government issued the bonds seeking to raise Kshs 40.0 bn for budgetary support, received bids worth Kshs 18.8 bn, and accepted bids worth Kshs 15.1 bn, translating to an 80.4 percent acceptance rate. The weighted average yields for the two bonds were 13.4 percent for FXD1/2017/10 and 14.0 percent for FXD1/2020/15.

In the money markets, 3-month bank placements ended the week at 7.7% (based on what we have been offered by various banks), while the yield on the 91-day T-bill increased by 8.4 bps to 9.0%. The average yield of the Top 5 Money Market Funds and the yield of Cytonn Money Market Fund declined by 0.1 bps and 0.2 bps to 9.9% and 10.3%, respectively.