T-bills were oversubscribed with the overall subscription coming in at 38.1%, marking a 13-week low. The performance was largely attributable to the tightened liquidity in the money market.
The Central Bank received KES 9.1 bn in bids and accepted 97.2% of the amount. Demand for the 91-day paper remained the highest, with the paper recording a subscription rate of 176.8%, down from 711.6% recorded the previous week.
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The subscription rate for the 182-day and 364-day papers came in at 13.6% and 7.1%, respectively.
The yield curve witnessed an inversion between the medium-term and long-term government securities as yields on medium-term securities continue to rise faster than yields on long-term securities, reflecting short-term expectations of the country’s interest rate environment and the government’s heightened appetite for borrowing.
Short-term securities yields also continued to rise with the gap between the yields progressively declining. Specifically for Treasury Bills, the yields on the 364-day, 182-day, and 91-day papers nudged higher to 12.728% (+2.0bps), 12.392% (7.0 bps), and 12.352% (+11.9bps), w/w respectively.
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Money market liquidity tightened during the week with the average interbank rate significantly increasing by 415.4 bps to 13.6%, from 9.4% recorded the previous week partly attributable to increased payments in comparison to the settlements.
Notably, the interbank rates touched levels last seen in 2015. Consequently, the daily traded volumes almost halved averaging KES 11.2 bn, from KES 21.8 bn from the previous week.
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On market news, the IMF released the World Economic Outlook update highlighting that global growth is projected to fall from 3.5% in 2022 to 3.0% in both 2023 and 2024. The forecast for 2023 is 0.2% higher than the 2.8% forecasted in the World Economic Outlook for April 2023, although it remains modest by historical standards. In addition, growth in Sub-Saharan Africa is projected to slow to 3.5% in 2023, from the estimated 3.9% growth recorded in 2022.
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Data from the Standard Investment Bank