T-Bills In The Red For The Second Week Running

During the week, T-bills were undersubscribed for the second successive week, with the overall subscription rate coming in at 97.1 percent, up from the 82.4 percent recorded the previous week.

The continued low subscription is partly attributable to tightened liquidity in the money market with the average interbank rate increasing to 5.2 percent from 5.1 percent recorded the previous week.

Investor’s preference for the shorter 91-day paper persisted, with the paper receiving bids worth 16.7 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 416.3 percent, up from 330.7 percent recorded the previous week.

The subscription rate for the 364-day declined to 21.5 percent from 26.4 percent recorded the previous week, while the subscription rate for the 182-day paper increased to 44.9 percent from 39.2 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 2.0 bps, 4.4 bps, and 5.2 bps to 10.2, 9.8, and 9.3 percent, respectively.

In the Primary Bond Market, the Central Bank of Kenya released results for the recently re-opened bonds; FXD1/2018/25 and FXD1/2022/25 with effective tenors to maturity of 5.6 years and 24.9 years, respectively.

The bonds recorded an undersubscription of 76.4 percent, partly attributable to investors’ preference for the shorter-dated papers as they sought to avoid duration risk, coupled with the tightened liquidity in the money market as the interbank rate increased to 5.2 percent from 5.1 percent recorded in the previous week.

The government issued the bonds seeking to raise Kshs 40.0 bn for budgetary support, received bids worth 30.6 billion shillings, and accepted bids worth 24.3 billion shillings, translating to a 79.6 percent acceptance rate.

The weighted average yield for the bonds came in at 13.8 percent and 14.5 percent for FXD1/2008/20 and FXD1/2022/25, respectively, while the coupon rates came in at 13.8 percent and 14.2 percent for FXD1/2008/20 and FXD1/2022/25, respectively.

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