T-Bill Subscription Dips On Account Of Tight Liquidity
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 11.4 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 284.1 percent, lower than the 552.2 percent recorded the previous week.
KEY TAKEAWAYS
The yields on the government papers were on an upward trajectory, with the yields on the 364-day and 182-day papers both increasing by 3.8 bps to 10.7 and 10.1 percent, respectively, while yields on the 91-day paper increased by 3.2 bps to 9.7 percent.
During the week, T-bills were undersubscribed, with the overall subscription rate coming in at 81.0 percent, down from 191.3 percent, recorded the previous week.
The dipping of T-Bill subscriptions was partly attributable to the continued tight liquidity in the money market with the average interbank rate increasing to 6.4 percent from 6.2 percent recorded the previous week.
Key to note, this is the first time in seven weeks that T-bills were undersubscribed.
Investor’s preference for the shorter 91-day paper persisted as they sought to avoid duration risk, with the paper receiving bids worth 11.4 billion shillings against the offered 4.0 billion shillings, translating to a subscription rate of 284.1 percent, lower than the 552.2 percent recorded the previous week.
The subscription rates for the 364-day and 182-day papers also declined to 36.7 and 44.0 percent from 63.0 and 175.3 percent, respectively, recorded the previous week.
The yields on the government papers were on an upward trajectory, with the yields on the 364-day and 182-day papers both increasing by 3.8 bps to 10.7 and 10.1 percent, respectively, while yields on the 91-day paper increased by 3.2 bps to 9.7 percent.
The Government accepted 18.5 billion shillings worth of bids out of the 19.4 billion shillings worth of bids received, translating to an acceptance rate of 97.0 percent.
The graph below compares the overall T- bills subscription rates obtained in 2017, 2022, and 2023 Year to Date (YTD):
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 by 3.8 bps and 3.2 bps to 10.7 percent and 9.7 percent, respectively.
The average yield on the Top 5 Money Market Funds remained relatively unchanged at 10.3 percent, similar to what was recorded the previous week, while that of Cytonn Money Market Fund declined slightly by 10.0 bps to 10.7 percent from 10.8 percent recorded the previous week.
Related Content: 91-Day Paper Demand Retains T-Bills Above 120%
About Juma
Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com
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