T-Bill Subscription Dips Further, Investors Rush For Shorter Papers

T-bills were undersubscribed for the second consecutive week, with the overall subscription rate coming in at 63.9 percent a decrease from the under-subscription rate of 94.2 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 11.0 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 275.3 percent, albeit lower than the 454.9 percent recorded the previous week.

The subscription rate for the 364-day paper increased to 23.4 percent, from 17.5 percent recorded the previous week. The subscription rate for the 182-day paper decreased to 19.9 percent, from 26.6 percent recorded the previous week. The government accepted all the bids of the 15.3 billion shillings.

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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 20.0 bps, 21.4 bps, and 14.5 bps to 11.9, 11.9, and 11.8 percent, respectively.

In the primary bond market, the Central Bank of Kenya released the auction results for the third tap sale of FXD1/2023/03 with a tenor to maturity of 2.9 years, with the government seeking to raise 15.0 billion shillings for budgetary support.

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The bond was oversubscribed, receiving bids worth 18.6 billion shillings, against the offered 15.0 billion shillings, translating to an oversubscription rate of 123.7 percent, partly attributable to investors’ preference for shorter-dated bonds as they seek to avoid duration risk. The government accepted all the Kshs 18.6 bn. The yield on the bond and coupon rate is 14.2 percent.

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Key to note is that, on its first auction, the FXD1/2023/003 received bids worth 20.7 billion shillings against the offered 20.0 billion shillings, translating to an oversubscription rate of 103.7 percent with the government accepting bids worth 20.3 billion shillings, translating to an acceptance rate of 97.8 percent.

The bond’s first tap sale received bids worth 10.6 billion shillings against the offered 10.0 billion shillings, translating to an oversubscription rate of 106.0 percent, with the government accepting bids worth 10.6 billion shillings translating to an acceptance rate of 100.0 percent.

The second tap-sale received bids worth 27.2 billion shillings against the offered 20.0 billion shillings translating to an oversubscription rate of 136.0 percent, with the government accepting bids worth 27.2 billion shillings translating to an acceptance rate of 100.0 percent.

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