T-Bills Oversubscribed Over The Week, Hits 121%

By Juma / Published March 20, 2023 | 1:21 pm

KEY POINTS

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 3.0 bps, 6.9 bps, and 3.8 bps to 10.8, 10.3, and 9.8 percent, respectively.

KEY TAKEAWAYS

The average rate for the accepted bids and coupon rate for the bond is 14.4 percent. Additionally, the government re-opened three bonds FXD2/2018/10, FXD1/2022/03, and FXD1/2019/15 seeking to raise additional 50.0 billion shillings for budgetary support.

During the week, T-bills remained oversubscribed, with the overall subscription rate coming in at 121.6%, albeit lower than the 148.5 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 7.3 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 182.3 percent, although significantly lower than the 501.0 percent recorded the previous week.

Similarly, the 182-day paper recorded an oversubscription rate of 174.7 percent, a shift from the undersubscription rate of 79.1 percent recorded the previous week.

On the other hand, the subscription rates for the 364-day paper declined to 44.3 percent from 76.8 percent recorded the previous week.

The government accepted bids worth 28.8 billion shillings out of the 29.2 billion shillings total bids received, translating to an acceptance rate of 98.6 percent.

In the primary market, the government was seeking to raise an additional Kshs 20.0 bn for infrastructural development by offering a tap sale of bond issue no. IFB1/2023/017 with tenor to maturity of 17.0 years.

The bond received bids worth 12.7 billion shillings translating to an undersubscription rate of 63.6 percent with the government accepting bids worth 12.7 billion shillings translating to an acceptance rate of 100.0 percent.

The government seeks to raise 20.0 billion shillings through the FXD2/2018/10, with the closing date for bidding set on 4^th April 2023, and 30.0 billion shillings through the FXD1/2022/03 and FXD1/2019/15, with the closing date for bidding set on 18^th April 2023.

The bonds have tenors to maturity of 2.1 years, 5.8 years, and 10.9 years for the FXD1/2022/03, FXD2/2018/10, and FXD1/2019/15 respectively, and coupon rates of 11.8, 12.5, and 12.9 percent for the FXD1/2022/03, FXD2/2018/10 and FXD1/2019/15 respectively.

“We anticipate the bonds to be undersubscribed as investors seek to avoid duration risk, as well as concerns on the government’s ability to sustain the current debt servicing costs. Our recommended bidding range for the bonds is; 12.6-13.1 percent for FXD1/2022/03, 13.7-14.2 percent for FXD2/2018/10, and 13.9-14.4 percent for the FXD1/2019/15 based on bonds of the similar tenor trading range.

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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