Treasury Takes a New KSH 77Bn Refinancing Facility from TDB

Treasury has taken up a new 77 billion shilling refinancing facility from Eastern and Southern Africa Trade and Development Bank (TDB).

The loan is an eight-year term and offers a floating interest of 6.70 percent above prevailing six-month London Interbank Offer Rate (LIBOR). The syndicated loan being financed was a two-year tenor starting October 2015 and offered a floating interest of 5.70 percent above LIBOR.

Treasury has increased its proportion of commercial bank borrowing (which also includes Eurobond financing) from 6.62 percent in June 2012 to 30.68 percent as at September 2017.

ERC

Energy Regulatory Commission will review and update fuel pump prices to be in effect from December 15^th to January 14^th period.

The monthly price review majorly takes into account the cost of importation of the petroleum products in the lagged 30-45 day period. The period was marked by steep global oil prices which peaked at two-year high USD 64.27 per barrel.

US Federal Reserve

The US Federal Reserve, as expected, hiked the fed fund rate by 25bps to 1.25 – 1.50 percent level.

The policymakers also boosted their growth forecasts to 2.5 percent in 2017 and 2018 and anticipate three additional rate hikes in the year. Thursday, the Bank of England and European Central Bank will announce their respective rate decisions which are widely expected to be maintained at 0.50 percent and 0.00 percent respectively.

Market Turnover

Market turnover dipped further to KES 487Mn with all focus fixed on this month’s primary bond issue which closed Wednesday.

The auction will be held today with results expected later this evening. The shilling lost ground on Wednesday which we believe was as a result of global dollar strength from the rate hike to 1.5 percent coupled with internal demand/supply factors.

The overnight rate closed the day at 6.59 percent.