T-Bills bounce back to oversubscription on improved liquidity

Kenya Shilling dropped 2.4 against dollar in Q3

T-bills recorded an oversubscription last week, with the overall subscription rate coming in at 115.0 percent, an increase from the under subscription of 94.3 percent recorded last week.

According to Cytonn Investment’s weekly report, the oversubscription was due to improved liquidity in the money markets because of government payments.

“The highest subscription rate was in the 364-day paper of 150.8%, an increase from 121.9% recorded the previous week.” Reads the report in part.

The subscription rate for the 91-day and 182-day papers also increased to 135.6 and 71.0 percent, from 108.8 and 60.8 percent respectively from the previous week.

The government continued to reject expensive bids by accepting only 23.3 billion shillings of the 27.6 billion shillings offered, translating to an acceptance rate of 84.4 percent.

Money Market performance

In the money markets, three-month bank placements ended the week at 7.9 percent, while the yield on the 91-day T-bill increased marginally to 7.1 percent, from 7.0 percent recorded last week.

The average yield of the top five money market funds increased by 0.3 percentage points to come in at 10.2 percent, from 9.9 percent recorded last week.

The yield on the Cytonn Money Market increased marginally during the week by 0.3 percentage points to come in at 10.8 percent, from 10.5 percent recorded the previous week.

Liquidity in the money market remained stable but the average interbank rate increased to 5.4 percent, from the 5.0 percent recorded the previous week and was highly linked to the payments made towards the settlements of the recently issued bonds coupled with tax receipts which were partly offset by government payments.

The average interbank volumes decreased by 1.1 percent to 12.9 billion shillings, from 13.0 billion shillings recorded the previous week.

According to the Central Bank of Kenya (CBK), commercial banks’ excess reserves came in at 21.6 billion shillings in relation to the 4.25 percent Cash Reserve Ratio.

During the week under review, the Kenyan shilling depreciated marginally by 0.2 percent against the US dollar to close at Ksh.109.9, from Ksh.109.6 recorded the previous week.

Depreciation of the shilling was due to strong dollar demand from manufacturers and energy importers, which outweighed dollar inflows from offshore investors and commodity exports.

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Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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