Secondary Turnover Up To Ksh 2.38Bn as Inter-bank Rates Averages 4.8%

Secondary market turnover closed at 2.38 billion shillings in Thursday’s session uplifted by crossover trades on the 2018 infrastructure bond paper.

The TAP Sale recorded subdued uptake with a paltry 3.82 billion shillings bids received of the 27 billion shillings on offer.

This was as a result of investor preference of short-end of the yield curve as seen in the T-Bill auction which achieved the highest subscription rate (155.80 percent) in the current financial year.

The weighted average accepted yield on the 91-day reduced by 0.3bps to 8.029 percent while inched slightly higher by 0.2bps and 0.4bps on the 182-day and 364-day tenors, respectively.

The investor preference to the short-end segment is a concern as it poses a refinancing risk in the next fiscal year. The inter-bank rate moved up slightly higher to average 4.819 percent.

In other news, initial estimates indicate that Treasury would earn 71 billion shillings per year if VAT is applied on petroleum products beginning September 2018.

The International Monetary Fund has pressed Kenya to remove the tax exemption as part of a wider plan to increase revenues, reduce fiscal deficits and lower debt burden.

VAT on petrol, diesel, and kerosene was first introduced in the VAT Act in 2013 with a three-year grace period which was deferred to September 2018.