Treasury Bill (T-bills) remained undersubscribed, with the subscription rate coming in at 62.6 percent, down from 74.6 percent the previous week.
The wave was attributed to scepticism among investors in the market owing to the coronavirus pandemic.
“The undersubscription was partly attributable to investors’ uncertainty in the market given the recent interest deferral discussions on Kenyan Government treasury papers, which is meant to avail cash flow for the government during the Coronavirus pandemic period.” Reads a report tabled by Cytonn Investment.
During the week, the Central Bank of Kenya released the auction results for the newly issued bond, FDX1/2020/5 with an effective tenor of 5.0-years and a coupon rate of 11.7 percent, in a bid to raise Ksh 50.0 billion for budgetary support.
The bond was undersubscribed, with the government receiving bids worth Ksh.34.5 billion, lower than the quantum of Ksh 50 billion.
It happens at a time when the global rating agency, Moody’s cast its doubt on Kenya over her debt encumber which is throwing her into negative ratings, from the previous rating of a stable.
The International Monetary Fund (IMF) Executive Board this week approved a Ksh 78.7 billion disbursement to Kenya to be drawn under the Rapid Credit Facility (RCF) to help the country address the impact of COVID-19.
According to the Stanbic Bank’s Monthly Purchasing Managers’ Index (PMI), businesses in the country recorded another reverse in April.