T-Bills Clock Three Week Back-To-Back Oversubscription

T-bills were oversubscribed for the third consecutive week, with the overall subscription rate coming in at 146.5 percent, up from an oversubscription rate of 122.6 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 32.0 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 799.6 percent, higher than the 621.9 percent recorded the previous week.

Notably, the 182-day and 364-day papers recorded continued under subscriptions of 21.5 and 10.2 percent, from undersubscription rates of 24.7 and 20.7 percent, respectively, recorded the previous week.

The government accepted bids worth 33.2 billion shillings and rejected 2.0 billion shillings out of the total 35.2 billion shillings bids received, translating to an acceptance rate of 94.7 percent.

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 12.7 bps, 4.9 bps, and 8.7 bps to 11.1, 10.5, and 10.2 percent, respectively.

In the primary market, the Central Bank of Kenya released the bond auction results for the re-opened treasury bond FXD1/2022/03 with an effective tenor to maturity of 2.1 years.

In line with our expectations, the bond was undersubscribed, receiving bids worth 1.8 billion shillings, against the offered 30.0 billion shillings, translating to an undersubscription rate of 24.4 percent, on the back of tightened liquidity in the money market, with the average interbank rate increasing by 0.3 percentage points to 8.7 percent, from 8.4 percent recorded the previous week.

The government continued to reject expensive bids, accepting bids worth 1.8 billion shillings out of the 7.4 billion shillings of total bids received, translating to an acceptance rate of 24.0 percent.

The accepted weighted average yield for the bond came in at 13.9 percent, while the coupon rate was 11.8 percent. Key to note, the government canceled the auction results for the FXD1/2019/15 with a tenor to maturity of 10.9 years as investors continued to prefer shorter-dated papers evidenced by the 799.6 percent oversubscription for the 91-day T-bill.

Related Content: T-Bills Oversubscribed The Second Consecutive Week, Closes At 122%