During the week, Treasury bills (T-bills) experienced an undersubscription for the first time in two weeks, reflecting a shift in investor sentiment.
The overall subscription rate stood at 76.8%, falling below the previous week’s oversubscription rate of 138.1%. This marked a notable decline in investor appetite for these government securities, which are typically seen as low-risk investments.
91-Day Paper Demand Wanes
Investor preference for the shorter-term 91-day T-bill diminished significantly. The paper received bids worth Kshs 3.4 billion against an offer of Kshs 4.0 billion, translating to an undersubscription rate of 84.6%. This was a steep drop compared to the impressive oversubscription rate of 333.1% recorded in the previous week. The declining demand for the 91-day paper could indicate shifting market dynamics, with investors potentially reassessing short-term opportunities amid changing economic conditions.
Read Also: T-bills Fully Subscribed During The Week, Interbank Market Narrows
Lower Interest in Longer-Dated Papers
The subscription rates for the 182-day and 364-day T-bills also saw declines, albeit at varying degrees. The 182-day paper recorded a subscription rate of 54.5%, down from the previous week’s 97.1%. Similarly, the 364-day paper experienced a slight dip in demand, with a subscription rate of 100.3%, compared to 101.1% in the prior week. Despite these declines, the 364-day paper managed to surpass the full subscription threshold, showing relatively stable interest in longer-term securities.
Government Acceptance Rate Remains High
Out of the total bids worth Kshs 18.9 billion received during the week, the government accepted Kshs 18.1 billion, translating to a high acceptance rate of 96.1%. This demonstrates the government’s continued reliance on T-bill auctions to meet its short-term financing needs, even as market demand fluctuates.
Mixed Yield Performance
The yields on T-bills showed mixed trends, reflecting investor sentiment and market adjustments. The 182-day T-bill yield increased slightly, rising by 0.5 basis points (bps) to 10.03%, maintaining the level recorded the previous week. Meanwhile, the 364-day and 91-day T-bill yields declined by 3.0 bps and 2.9 bps, settling at 11.30% and 9.56%, respectively, compared to 11.33% and 9.59% in the prior week.
The slight uptick in the 182-day yield suggests that investors may be seeking better returns in the mid-term securities segment. Conversely, the drop in yields for the 91-day and 364-day papers indicates softening demand and potentially higher liquidity in the market.
Read Also: Kenyans’ Appetite For T-Bills Remain High With A Shift To 91-Day Paper