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T-Bills Dip Deep As The Year Fades, Clocks 69.9%

BY Soko Directory Team · December 27, 2022 09:12 am

KEY POINTS

Investor’s preference for the shorter 91-day paper persisted as they sought to avoid duration risk, with the paper receiving bids worth 13.9 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 347.9 percent, down from 487.7 percent recorded the previous week.

KEY TAKEAWAYS

The Government continued to reject expensive bids, accepting a total of 13.8 billion shillings worth of bids out of the 16.8 billion shillings worth of bids received, translating to an acceptance rate of 82.5 percent.

In the Primary Bond Market, the Central Bank of Kenya released the auction results for the tap sale of IFB1/2022/006 with an effective tenor to maturity of 5.9 years.

During the week, T-bills were undersubscribed, with the overall subscription rate coming in at 69.9 percent, down from the 121.8 percent recorded the previous week.

The dipping of the T-Bills during the week was partly attributable to the tightened liquidity in the money market with the average interbank rate increasing to 6.2 percent from 5.1 percent recorded the previous week.

Investor’s preference for the shorter 91-day paper persisted as they sought to avoid duration risk, with the paper receiving bids worth 13.9 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 347.9 percent, down from 487.7 percent recorded the previous week.

The subscription rates for the 364-day and the 182-day papers also declined to 19.3 and 9.3 percent from 29.9 percent and 67.2 percent recorded the previous week, respectively.

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 slightly by 1.1 bps, 0.4 bps, and 1.4 bps to 10.3, 9.8, and 9.4 percent, respectively.

The Government continued to reject expensive bids, accepting a total of 13.8 billion shillings worth of bids out of the 16.8 billion shillings worth of bids received, translating to an acceptance rate of 82.5 percent.

In the Primary Bond Market, the Central Bank of Kenya released the auction results for the tap sale of IFB1/2022/006 with an effective tenor to maturity of 5.9 years.

The bond was undersubscribed partly attributable to investors’ preference for shorter-dated papers as they sought to avoid duration risk, with the overall subscription rate coming in at 54.1 percent, with the government receiving bids worth 10.8 billion shillings against offered 20.0 bn. The coupon rate and weighted average yield of the bond came in at 13.2 percent.

In the money markets, 3-month bank placements ended the week at 7.7 percent (based on what we have been offered by various banks), while the yield on the 364-day T-bill and 91-day T-bill increased slightly by 1.1 bps and 1.4 bps to 10.3 percent and 9.4 percent, respectively.

The average yield of the Top 5 Money Market Funds and Cytonn Money Market Fund increased by 19.6 bps and 21.0 bps to 10.1 percent and 10.9 percent, respectively.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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