T-Bills Snail Through The Week With An Undersubscription

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The subscription of T-Bills has remained below 100 percent for the past three weeks as Covid-19 continues to sweep across the world and country.

Despite the fact that the curve in Kenya seems to be ‘flattening’, T-Bills have continued being in the red despite the high liquidity in the money markets.

Last week, the T-bills subscription came in at 52.3%, up from 40.4% the previous week despite high liquidity in the money market.

The markets remained liquid supported by government payments with the average interbank rate ending the week at 3.0%, lower than the 2019 average rate of 4.3%.

The highest subscription rate was on the 91-day paper, which came in 113.3%, up from 65.5% recorded the previous week.

The subscription for the 182-day paper also increased to 61.0% from 8.8% recorded the previous week, while that of the 364-day paper decreased to 19.3% from 61.8% recorded the previous week.

The acceptance rate reduced to 85.4% from 100.0% the previous week, while the yields on the 91-day, 182-day, and 364-day papers remained unchanged at 6.3%, 6.6%, and 7.5%, respectively.

In the money markets, 3-month bank placements ended the week at 7.2% (based on what we have been offered by various banks), while the yield on the 91-day T-bill remained unchanged at 6.3%.

The average yield of Top 5 Money Market Funds declined marginally to 10.0% from 10.1% previously. The yield on the Cytonn Money Market also declined marginally to close at 10.6%, from 10.7% recorded the previous week.

The money markets remained liquid during the week, despite the average interbank rate increasing to 3.0%, from 2.6% recorded the previous week, mainly supported by government payments and maturing TADS of Kshs 81.1 bn.

TADs are used when the securities held by the CBK for Repo purposes are exhausted or when CBK considers it desirable to offer longer tenor options.

The average interbank volumes increased by 23.0% to Kshs 16.9 bn, from Kshs 13.8 bn recorded the previous week. The commercial banks’ excess reserves came in at Kshs 28.7 bn.

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