Capital Markets

T-bill subscriptions short of target, with eye on bond issue

The National Treasury building in Nairobi. FILE PHOTO | NMG
The National Treasury building in Nairobi. FILE PHOTO | NMG 

Treasury bill subscriptions fell below target last week as investors kept their cash in hand awaiting this week’s bond issue.

The fall in subscriptions was in contrast to the previous week when investors had offered a total of Sh36.8 billion, pumping heavily for the six month paper.

The T-bill auction received bids worth Sh22 billion against an offered amount of Sh24 billion, with investors offering below target amounts on the six and 12 month tenors as they eye the two year bond.

Rates were flat however, coming in at 8.13 per cent for the 91-day, 10.3 on the 182-day and 10.93 on the 364-day paper.

“Focus shifts to the auction to be held this week. Expectations on the two-year bond still remain around the 11.5 to 12 per cent range, with the 10-year expected to get more aggressive bids this time round than during the previous auction,” said Genghis Capital in a market brief on Friday.

This week is likely to see a higher rate of acceptance of bids, given that the government is in need of funds to finance the repeat presidential election, which are expected to cost more than Sh15 billion.

The low subscriptions however came in the face of a fairly liquid market, suggesting that it was a strategic move by investors to keep out of the auction rather than one forced on them by market conditions.

Analysts say that the market has been fairly liquid in the past three weeks due to government payments to its departments and agencies, with CBK also reducing its liquidity withdrawal.