Central Bank Offers 2 and 9 Year Treasury Bonds

Equities

Trading activity during the week decreased as turnover declined to Kes.2bn on a volume of 78M shares, down from Kes.2.6bn on 92M shares posted the previous week.

Foreign investors’ purchases was held at an average of 62% of the total turnover while their total sales declined slightly by 14.25% to close the week at a mean of 58%.The NSE 20 Share Index shaved off 36.84 points during the week to settle at 3890.85 points. All Share Index (NASI) shed 0.03 points during the week to stand at 146.74 points. The NSE 25 Share Index was down 10.76 points during the week to settle at 4216.20 points.

Fixed Income

The Bond Market registered reduced activity, with bonds totaling to Kes.6.3bn transacted compared to Kes.9.1bn posted the previous week. Last week the Central Bank of Kenya offered 2 and 9 year Treasury Bond for a total amount of up to Kshs 30 Billion. The total number of bids received was 713 amounting to Kshs 41.51 Billion and 922 amounting to Kshs 39.43 Billion for the 2 year and 9 year bond respectively. The Weighted average rate for successful bids was 12.020% for the 2-year Bond and 13.339% for the 9-year Bond.

Read: Treasury Bills Subscription Declines During the Week

Interest rates have been on a fall as the Central Bank has consistently rejected aggressively priced bids. The interest rates on the 91, 182 and 364-day Treasury bills have fallen by between 1.2 and 2.4 percentage points apiece since the beginning of the year. On the 91-day paper this week, the rate decreased further to 7.998% from 8.19%, the 182-day paper declined to 10.137% from 10.27% previously while the 364-day paper dropped to 11.570% from 11.69% earlier. Since the start of the year, the interbank rate has fallen from 6.75% to 5.44 % and has stayed below the CBR indicating relatively high levels of liquidity in the interbank market.

Currency

The Kenyan shilling weakened slightly against the US dollar during the week to close at a mean of Kes 100.69 on Friday compared to an average of Kes 100.60 previously as a result of pressure on the expectations that a rise in global oil prices would hike the fuel import bill.

The Kenya Shilling has gained steadily against the US dollar since the beginning of the year due to support from inflows of hard currency from foreign remittances, improved earnings from tea and horticulture and a reduction in import bill due to lower oil prices as the narrowing current account deficit.

Article by Kingdom Securities Ltd.