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T-Bills Oversubscribed In November Over Eased Liquidity

BY Soko Directory Team · December 5, 2022 06:12 am

KEY POINTS

The overall subscription rate for the 364-day, 182-day, and 91-day papers significantly increased to 105.2, 112.2, and 462.4 percent from 29.0, 61.7, and 324.2 percent respectively recorded in October 2022.

KEY TAKEAWAYS

Investor’s preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 13.2 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 330.7%, up from 316.8% recorded the previous week.

The subscription rates for the 364-day and 182-day papers declined to 26.4% and 39.2% from 76.9% and 68.5%, respectively recorded the previous week.

During the month of November, T-bills were oversubscribed, with the overall rate increasing to 167.7 percent from 91.9 percent recorded in the month of October 2022.

The oversubscription of the T-Bills was partly attributable to eased liquidity during the period with the average interbank rate declining to 4.6 percent from 5.1 percent recorded in October.

The overall subscription rate for the 364-day, 182-day, and 91-day papers significantly increased to 105.2, 112.2, and 462.4 percent from 29.0, 61.7, and 324.2 percent respectively recorded in October 2022.

The average yields on the government papers recorded mixed performance, with the average yields on the 91-day and 364-day papers increasing by 13.0 bps and 25.1 bps to 9.2 and 10.2 percent, from 9.1 and 9.9 percent respectively recorded in October 2022.

For the month of November, the government continued to reject expensive bids, accepting a total of Kshs 129.3 bn of the Kshs 161.0 bn worth of bids received, translating to an acceptance rate of 80.3 percent.

During the week, T-bills were undersubscribed for the first time in five weeks, with the overall subscription rate declining to 82.4 percent, from the 113.4 percent recorded the previous week.

The lower subscription is partly attributable to tightened liquidity in the money market with the average interbank rate increasing to 5.1% from 4.8% recorded the previous week.

Investor’s preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 13.2 bn against the offered Kshs 4.0 bn, translating to a subscription rate of 330.7%, up from 316.8% recorded the previous week.

The subscription rates for the 364-day and 182-day papers declined to 26.4% and 39.2% from 76.9% and 68.5%, respectively 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 0.6 bps, 1.9 bps, and 3.8 bps to 10.2%, 9.8%, and 9.3%, respectively.

In the Primary Bond Market, the Central Bank of Kenya released the results for a switch auction of three treasury bills issues No. 2494/091, 2454/182, and 2380/364, and T-Bond issue No. FXD1/2021/2 to an infrastructure bond issue No. IFB1/2022/6, with an effective tenor to maturity of 6.0 years in a bid to raise Kshs 87.8 bn to meet upcoming maturities.

The bond was undersubscribed having received bids worth Kshs 52.9 bn translating to a subscription rate of 60.3%, partly attributable to investors avoiding the duration risk and tightening liquidity in the money market.

The government accepted bids worth Kshs 49.1 bn translating to an acceptance rate of 92.8%. The coupon rate and the market average yield for the bond both came at 13.2%.

The November 2022 bonds were oversubscribed, with IFB1/2022/14 receiving bids worth Kshs 91.8 bn against the offered Kshs 60.0 bn, translating to a subscription rate of 153.1% with a subsequent tap sale received bids worth Kshs 19.1 bn against the offered Kshs 5.0 bn, translating to a subscription rate of 382.7%.

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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