T-bills subscription rate increases, Cytonn

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During the month of February, T-bill auctions recorded an oversubscription, with the overall subscription rate coming in at 103.4%, an increase from 67.3% recorded in the month of January. The highest subscription rate was in the 364-day paper, which came in at 146.4%, an increase from 115.9% recorded the previous month. The subscription for the 182-day and 91-day papers increased to 70.7% and 62.1%, from 33.1% and 45.5% respectively recorded in the month of January.

During the week, the T-bills subscription rate increased, with the overall subscription rate coming in at 132.0%, from 124.9% recorded the previous week. The highest subscription rate was in the 91-day paper at 157.0%, an increase from 116.9% recorded the previous week. The 364-day paper’s subscription rate increased to 151.6% from 139.0% recorded the previous week while the subscription for the 182-day paper declined to 102.3% from 114.0% recorded the previous week;

In the primary bond auction, the Central Bank of Kenya re-opened two bonds, FXD1/2013/15 and FXD1/2012/20, with effective tenors of 7.1 years and 11.8 years, with coupons of 11.3% and 12.0%, respectively.  The issue recorded an overall subscription rate of 83.7%, with the government receiving bids worth Kshs 41.9 bn, lower than the Kshs 50.0 bn offered and accepted only Kshs 32.1 bn, translating to an acceptance rate of 76.7%. The weighted average rate of accepted bids was 11.9% and 12.7%, for the FXD1/2013/15 and FXD1/2012/20, respectively. Notably, given the undersubscription recorded, the Central Bank of Kenya re-opened the two bonds on tap sale during the month. The issues recorded low demand, with the overall subscription rate coming in at 62.4%, mainly attributable to the short bidding period and over-concentration of similar-tenure bonds in the market. The acceptance rate came in at 97.1%, with the weighted average rate of accepted bids being 11.8% and 12.6%, respectively;

In addition, the Kenya National Bureau of Statistics (KNBS) released inflation data, revealing the y/y inflation for February, 2021 increased to 5.8% from the 5.7% recorded in January;


During the month of February, the equities market was on an upward trajectory, with NASI, NSE 20 and NSE 25 gaining by 6.3%, 1.8% and 5.5%, respectively. The equities market performance was driven by gains recorded by large-cap stocks such as BAT and EABL which were up 20.5% and 10.9%, respectively, while Safaricom and KCB Group both recorded gains of 8.1%. The gains were however weighed down by losses recorded by some banking stocks such as Diamond Trust Bank (DTB-K) and Standard Chartered Bank which declined by 8.9%, and 2.7%, respectively. During the month, the Central Bank of Kenya (CBK), released the Commercial Banks’ Credit Survey Report for the quarter ended December 2020, highlighting that the banking sector’s loan book recorded a 7.1% y/y growth compared to 8.8% growth the prior year, with gross loans increasing to Kshs 3.0 tn in December 2020, from Kshs 2.8 tn recorded in December 2019. Additionally, Cooperative Bank of Kenya disclosed that it had secured a long-term financing facility of USD 75.0 mn (Kshs 8.2 bn) from the International Finance Corporation (IFC) for onward lending to the Micro and Small Medium Enterprises (MSMEs);

Real Estate

During the month, various industry reports were released namely, Hass Consult Q4’2020 House Price Index, Hass Consult Q4’2020 Land Price Index, Knight Frank Kenya Market Update H2’2020 Report, and, the Leading Economic Indicators December (LEI) 2020. In the residential sector, Infinity Development Limited, a design and building provider, announced plans to develop a 40-floor development dubbed West Riverside Tower to be located along Ring Road in Westlands. In the retail sector, French Retailer Carrefour opened a new outlet at Westgate Mall, Westlands, in an expansion drive that saw it take up approximately 15,000 SQFT of space previously occupied by Shoprite. The Fahari I-REIT closed the month trading at an average price of Kshs 6.6 per share, representing a 6.5%  increase compared to the previous month’s closing price of Kshs 6.2 and bringing the YTD increase to  8.2%;

Kenya Shilling:

During the month, the Kenya Shilling appreciated marginally by 0.3% against the US Dollar to close the month at Kshs 109.8, from Kshs 110.1 recorded at the end of January 2021 mostly attributable to the decreased dollar demand from general importers due to the two-week long Lunar holiday in the Asian markets who are among the key trading partners. During the week, the Kenyan shilling depreciated marginally against the US dollar by 0.2% to Kshs 109.8 from Kshs 109.6 recorded the previous week. On an YTD basis, the shilling has depreciated by 0.6% against the dollar, in comparison to the 7.7% depreciation recorded in 2020. We expect continued pressure on the Kenyan shilling due to:

Demand from merchandise traders as they beef up their hard currency positions as businesses reopen following the festive season,

A slowdown in foreign dollar currency inflows due to reduced dollar inflows from sectors such as tourism and horticulture, and,

Continued uncertainty globally making people prefer holding dollars and other hard currencies.

However, in the short term, the shilling is expected to be supported by:

The Forex reserves which are currently at USD 7.6 bn (equivalent to 4.7-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover,

The improving current account position which narrowed to 4.8% of GDP in the 12 months to December 2020 compared to 5.8% of GDP during a similar period in 2019, and,

Improving diaspora remittances evidenced by a 19.7% y/y increase to USD 299.6 mn in December 2020, from USD 250.3 mn recorded over the same period in 2019, has cushioned the shilling against further depreciation.

Weekly Highlight:


The y/y inflation for the month of February increased to 5.8%, from the 5.7% recorded in January. The increase was due to:

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