T-Bill Subscription Falls Below 50% Ahead Of Planned Demos

T-bills were undersubscribed last week with the overall subscription rate coming in at 49.2 percent, a significant decline from the 121.6 percent recorded the previous week.

The massive drop in the T-Bill subscription was attributable to persisting tightened liquidity in the money market with the average interbank rate increasing to 7.2 percent from 6.9 percent recorded the previous week. The last time the interbank rate was this high was in October 2019.

Investor’s preference for the shorter 91-day paper persisted as they sought to avoid duration risk, with the paper receiving bids worth 7.1 billion shillings against the offered Kshs 4.0 bn, translating to an oversubscription rate of 179.4 percent, albeit slightly lower than the 182.3 percent recorded the previous week.

Notably, the 182-day and 364-day papers recorded under subscriptions of 36.9 and 9.3 percent from an oversubscription rate of 174.7 percent and an undersubscription rate of 44.3 percent respectively, recorded the previous week.

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The government accepted bids worth 11.5 billion shillings and rejected 0.3 billion shillings out of the total 11.8 billion shillings bids received, translating to an acceptance rate of 97.5 percent.

The yields on the government papers were on an upward trajectory, with the yields on the 364-day paper, 182-day, and 91-day papers increasing by 1.0 bps, 5.9 bps, and 4.9 bps to 10.8, 10.3, and 9.8 percent respectively.

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 and 91-day T-bill remained relatively unchanged at 10.8 percent and 9.8 percent respectively, similar to what was recorded the previous week.

The average yields of the Top 5 Money Market Funds increased by 38.4 bps to close the week at 10.8 percent, from 10.4 percent recorded the previous week.

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