Investors Warm Up Long-term Bonds As T-Bills Linger In The Red

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There was a high demand for the months bond offers as the overall subscription rate for the three bonds was at 163. percent, the government received bids worth 81.7 billion shillings, higher than the 50.0 billion shillings offered.

The three re-opened auctions were, FXD2/2010/15, FXD1/2020/15, and FXD1/2011/20  with fixed coupons of 9.0 percent, 12.8 percent, and 10.0 percent and effective tenors of 5.3 years, 14.5 years, and 10.7 years, respectively.

It is clear that investors are happy with longer-term bonds as FXD1/2020/15 had the highest subscription rate coming in at 99.6 percent, 49.8 billion shillings, compared to the 50.0 billion shillings offered.

Yields on the bonds came in at 10.6, 12.5, and 12.0 percent, for the  FXD2/2010/15, FXD1/2020/15, and FXD1/2011/20, respectively.

The government rejected high bids only accepting 64.2 billion shillings out of the 81.7 billion shillings worth of bids received, translating to an acceptance rate of 78.6 percent.

T-Bills

Last week, T-bills remained undersubscribed, with the subscription rate coming in at 70.4 percent, down from 84.1 percent the previous week.

The highest subscription rate was in the 91-day paper, which came in at 151.3 percent, down from 180.7 percent recorded the previous week as it remained attractive on a risk-adjusted basis compared to the others.

The subscription for the 182-day paper fell to 19.2 percent, from 76.0 percent recorded the previous week, while that of the 364-day paper increased to 89.2 percent from 53.5 percent recorded the previous week.

The yields on all three papers remained unchanged at 6.3, 6.7, and 7.6 percent respectively. The acceptance rate increased to 100.0 percent, from 92.6 percent recorded the previous week, with the government accepting 16.9 billion shillings worth of bids received.

Money Markets

In the money markets, 3-month bank placements ended the week at 7.2 percent (based on what we have been offered by various banks).

The yield on the 91-day T-bill remained unchanged at 6.3 percent. The average yield of Top 5 Money Market Funds remained unchanged at 10.0 percent.

The yield on the Cytonn Money Market remained unchanged at 10.6 percent, similar to what was recorded the previous week.

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