T-Bill Subscription Hits 204.5 Percent During The Week

During the week, T-bills remained oversubscribed, with the overall subscription rate coming in at 204.5 percent, an increase from the 181.9 percent recorded the previous week.

The oversubscription was partly attributable to investors’ preference for the shorter-dated papers as they sought to avoid duration risk coupled with the ample liquidity in the money market with the average interbank rate easing to 4.2 percent from 4.6 percent recorded the previous week.

Investor’s preference for the shorter 91-day paper persisted, with the paper receiving bids worth 26.5 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 662.8 percent, up from 463.8 percent recorded the previous week.

The subscription rates for the 182-day also increased to 138.9 percent from 83.4 percent, while the subscription rate for the 364-day paper declined to 86.8 percent from 167.6 percent, recorded the previous week.

The yields on the government papers were on an upward trajectory, with the yields on the 364-day, 182-day, and 91-day papers increasing by 7.7 bps, 1.5 bps, and 3.4 bps to 10.2, 9.7, and 9.2 percent, respectively.

In the Primary Bond Market, the Central Bank of Kenya released the auction results for the newly issued infrastructure bond; IFB1/2022/14 with an effective tenor to maturity of 14 years.

“As per our expectations, the bond recorded an oversubscription of 153.1%, partly attributable to the ample liquidity in the market and the attractive tax-free nature of the infrastructure bond,” said Cytonn in their latest report.

The government issued the bond seeking to raise 60.0 billion shillings for funding infrastructure projects in the FY’2022/2023, received bids worth 91.8 billion shillings, and accepted bids worth 75.6 billion shillings, translating to an 82.3 percent acceptance rate. The coupon rate and the weighted average yield for the bond both came in at 13.9 percent.

At the same time, during the week, liquidity in the money markets eased, with the average interbank rate declining to 4.2 percent from 4.6 percent recorded the previous week, partly attributable to government payments that offset tax remittances.

The average interbank volumes traded declined by 42.3 percent to 11.6 billion shillings from 20.2 billion shillings recorded the previous week.