T-Bill Subscription Above 100% Last Week But Lower Than The Previous Week

T-bills were oversubscribed for the third consecutive week, with the overall oversubscription rate coming in at 147.0 percent, down from the oversubscription rate of 241.5 percent recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth 25.6 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 639.0 percent, significantly lower than the oversubscription rate of 1114.4 percent recorded the previous week.

The subscription rate for the 182-day paper decreased to 61.9 percent, from 101.0 percent recorded the previous week, while the subscription rate for the 364-day paper increased to 35.3 percent, from 32.9 percent, recorded the previous week.

The government accepted a total of 34.1 billion shillings worth of bids out of 35.3 billion shillings of bids received, translating to an acceptance rate of 96.8 percent.

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The yields on the government papers continued to rise, with the yields on the 364-day, 182-day, and 91-day papers increasing by 10.0 bps, 11.3 bps, and 8.9 bps to 16.5, 16.3, and 16.2 percent, respectively.

In the primary bond market, the Central Bank of Kenya released the auction results for the tap sale of the newly issued bond FXD1/2024/003 with a tenor to maturity of 3.0 years and the re-opened bond FXD1/2023/005 with a 4.5-year tenor to maturity.

The tap sale was undersubscribed with the overall subscription rate coming in at 79.1 percent, receiving bids worth 11.9 billion shillings against the offered 15.0 billion shillings.

The government accepted bids worth Kshs 11.8 bn, translating to an acceptance rate of 99.1 percent. The weighted average yield of accepted bids came in at 18.4 and 18.8 percent for the FXD1/2024/003 and FXD1/2023/005, respectively.

The coupon rates for the FXD1/2024/003 and FXD1/2023/005 were set at 18.4 and 16.8 percent, respectively. With the Inflation rate at 6.6 percent as of December 2023, the real return of the bonds is 11.8 and 12.2 percent for the FXD1/2024/003 and FXD1/2023/005, respectively.

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Source: Cytonn Report.