T-bills were undersubscribed for the second consecutive week, with the overall undersubscription rate coming in at 60.0 percent, lower than the undersubscription rate of 94.7 percent recorded the previous week.
Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth 5.9 billion shillings against the offered 4.0 billion shillings, translating to an oversubscription rate of 148.0 percent, lower than the oversubscription rate of 257.2 percent recorded the previous week.
The subscription rate for the 182-day paper decreased to 39.3 percent from the 99.3 percent recorded the previous week, while the subscription rate for the 364-day paper increased to 45.5 percent, from the 25.0 percent recorded the previous week.
The government accepted a total of 13.4 billion shillings worth of bids out of 14.4 billion shillings bids received, translating to an acceptance rate of 92.9 percent.
The yields on the government papers recorded mixed performances, with the yield on the 91-day paper decreasing by 0.03 bps to remain relatively unchanged at 16.0 percent, while the yields on the 182-day and 364-day papers increased by 3.8 bps and 0.1 bps to remain relatively unchanged at 16.7 and 16.8 percent respectively.
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During the week, the Central Bank of Kenya released the tap sale results for the re-opened bonds, FXD1/2023/002 with a tenor to maturity of 1.2 years, and a fixed coupon rate of 17.0 percent, FXD1/2024/003 with a tenor to maturity of 2.6 years, and a fixed coupon rate of 18.4 percent, FXD1/2023/005 with a tenor to maturity of 4.1 years and a fixed coupon rate of 16.8% and FXD1/2024/010 with a tenor to maturity of 8.7 years and a fixed coupon rate of 14.2 percent.
The bonds were oversubscribed with the overall subscription rate coming in at 125.7 percent, receiving bids worth 25.1 billion shillings against the offered 20.0 billion shillings. The government accepted bids worth 23.9 billion shillings, translating to an acceptance rate of 94.9 percent.
The weighted average yield of accepted bids for the FXD1/2023/002, FXD1/2024/003, FXD1/2023/005, and FXD1/2024/010 came in at 17.1, 17.6, 18.2, and 16.4% respectively, remaining unchanged from the weighted average rate of accepted bids in the last auction.
With the Inflation rate at 5.1 percent as of May 2024, the real return of the FXD1/2023/002, FXD1/2024/003, FXD1/2023/005, and FXD1/2024/010 is 12.0, 12.5, 13.1, and 11.3 percent respectively.