T-Bill Subscription Plunges To End The Week At 94.2%

T-bills were undersubscribed, with the overall subscription rate coming in at 94.2 percent, down from an oversubscription rate of 138.0 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 18.2 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 454.9 percent, albeit lower than the 725.5 percent recorded the previous week.

The subscription rates for the 182-day increased to 26.6 percent, from 18.9 percent recorded the previous week.

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The subscription rate for the 364-day decreased to 17.5 percent, from 22.0 percent recorded the previous week. The government rejected expensive bids, accepting bids worth 10.6 billion shillings out of the 22.6 billion shillings total bids received, translating to an acceptance rate of 46.8 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 12.6 bps, 10.1 bps, and 22.6 bps to 11.7, 11.6, and 11.6 percent, respectively.

In the primary bond market, the government sought to raise 60.0 billion shillings to fund infrastructural projects by offering an infrastructure bond IFB1/2023/007 with a tenor to maturity of 7.0 years.

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“In line with our expectations, the bond was oversubscribed, receiving bids worth 220.5 billion shillings, against the offered 60.0 billion shillings, translating to an oversubscription rate of 367.5 percent, partly attributable to the investor preference for the Infrastructure bonds as they are tax-free,” said experts from Cytonn Investments.

The government accepted bids worth 213.4 billion shillings translating to an acceptance rate of 96.8 percent. Key to note, both the weighted average yield of accepted bids and the coupon rate came at 15.8 percent.

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