Kenya: T-bill uptake plunges as subscribers go for bonds

Treasury bills were for the second week running under-subscribed due to reduced liquidity in the market.

During last week’s auction, the overall subscription fell to 31.25 per cent from 33.6 per cent recorded the previous week.

Market analysts said this was triggered by investors shifting focus to the Sh30 billion 10-year bond currently on offer.

The subscription rates for the 91-, 182- and 364-day government papers came in at 55 per cent, 40 per cent and 13 per cent respectively, compared to 56 per cent, 41.9 per cent, and 16.2 per cent recorded the previous week respectively.

Central Bank of Kenya (CBK) had offered a total of Sh24 billion, receiving bids worth Sh7.5 billion and accepting Sh6.5 billion.

Liquidity in the market has tightened in recent weeks due to CBK withdrawals in support of the shilling—mainly through the Repo market where the rate of 7.99 per cent closely matches that of the 91-day Treasury bill.

A week ago, Cytonn Investments said there was reduced liquidity in the market leading to a net liquidity reduction of Sh1.1 billion from a net liquidity injection of Sh42.2 billion the previous week.

“This resulted in an increase in the interbank rate to six per cent from five per cent the previous week. The tight liquidity position was mainly as a result of Treasury bill primary issues, transfers from banks in the form of taxes and reverse repo maturities, which in total amounted to Sh83.8 billion against liquidity injection of Sh82.7 billion,” said the investments firm.

Credit: Business Daily

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Published on 24 July 2017 | 10:26 am at Source