During the month of January, T-bill auctions recorded an undersubscription, with the overall subscription rate coming in at 67.3%, but still an increase from 54.8% recorded in the month of December, 2020.
The highest subscription rate was in the 364-day paper, which came in at 115.9%, an increase from 50.4% recorded the previous month. The subscription for the 182-day and 91-day papers declined to 33.1% and 45.5% from 40.2% and 94.5% recorded in the month of December, 2020, respectively.
During the last week of January, T-bills subscription rate declined with the overall subscription rate coming in at 66.2%, from 84.5% recorded the previous week. This can be mainly attributed to the continued tightening of liquidity in the money markets. The highest subscription rate was in the 364-day paper at 134.2% but still a decline from 172.2% recorded the previous week. The subscription for the 182-day paper also declined to 19.7% from 53.7% recorded the previous week, while the 91-day paper increased to 12.7% from 9.2% recorded the previous week.
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During the month, the Central Bank of Kenya issued two bonds, FXD1/2021/002 and IFB1/2021/016, having effective tenors of 2 years and 16 years with coupons of 9.5% and 12.3%, respectively. The two issues recorded high demand, with the overall subscription rate coming in at 244.6% and 250.7% respectively, mainly supported by the attractive tax-free nature of the infrastructure bond and improved liquidity in the market, respectively.
For the month of February, the government is seeking to raise Ksh50 billion for budgetary support by reopening two bonds, FXD1/2013/15 and FXD1/2012/20, with a time to maturity of 7.1 and 11.8 years, respectively. The bonds have coupons of 11.3% and 12.0% and are currently trading at a rate of 11.4% and 12.3%, respectively in the secondary market.
During the month of January, the equities market was on an upward trajectory, with NASI, NSE20 and NSE 25 gaining by 2.3%, 0.7%, and 0.6%, respectively. The equities market performance was driven by gains recorded by large-cap stocks such as BAT, Bamburi, and Safaricom, which gained by 12.5%, 11.1%, and 4.7%, respectively. The gains were however weighed down by losses recorded by banking stocks such as NCBA Group, KCB Group, and Standard Chartered Bank, which declined by 7.5%, 5.9%, and 4.0%, respectively.
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