T-Bills Hit 188% In Subscription As Investors Rush For Shorter Bonds

T-bills were oversubscribed, with the overall subscription rate coming in at 188.9 percent, up from the 110.7 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 34.6 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 865.8 percent, significantly higher than the 508.0 percent recorded the previous week.

The subscription rates for the 182-day and the 364-day papers increased to 88.4 and 18.6 percent, from 53.4 and 9.2 percent, respectively, recorded the previous week.

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The government accepted bids worth 45.3 billion shillings, translating to an acceptance rate of 99.9 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 10.0 bps, 17.5 bps, and 9.2 bps to 11.3, 10.9, and 10.4 percent, respectively.

In the primary bond market, the Central Bank of Kenya released the auction results for the newly issued bond FXD1/2023/003 with a tenor to maturity of 3 years.

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In line with our expectations, the bond recorded an oversubscription rate of 103.7 percent, partly attributable to investors’ preference for shorter-dated bonds as they seek to avoid duration risk.

The government issued the bond seeking to raise Kshs 20.0 bn for budgetary support. The band received bids worth Kshs 20.7 bn with the government accepting bids worth Kshs 20.3 bn, translating to an acceptance rate of 97.8 percent.

The bond was priced at par and both the weighted average yield of accepted bids and the coupon rate came at 14.2 percent.

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During the week, liquidity in the money markets eased, with the average interbank rate decreasing to 9.5 percent, from 9.7 percent recorded the previous week, partly attributable to government payments that offset tax remittances.

The average interbank volumes traded increased by 2.1 percent to Kshs 19.4 bn, from Kshs 19.0 bn recorded the previous week.