Interbank Rate to 4.1% As Yield on Eurobonds Decline

The average interbank rate increased to 4.1 percent from 3.2 percent recorded the previous week according to a report released by Cytonn Investments

According to the report, the average volumes traded in the interbank market increased by 13.0 percent to 16.9 billion shillings from 15.0 billion shillings the previous week.

The increase in the average interbank rate points to declined liquidity, which the CBK attributed to banks seeking funds for VAT remittances during the week.

Kenya Eurobonds:

According to Bloomberg, the yield on the 5-Year and 10-year Eurobonds issued in 2014 declined by 0.3 percent points and 0.4 percent points to 3.9 percent and 6.4 percent from 4.2 percent and 6.8 percent the previous week respectively.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.9 percent points and 3.2 percent points for the 5-year and 10-year Eurobonds, respectively, an indication of the relatively stable macroeconomic conditions in the country.

For the February 2018 Eurobond issue, during the week, the yields on the 10-year and 30-year Eurobonds declined by 0.3 percent points and 0.4 percent points to 7.1 percent and 8.1 percent from 7.4 percent and 8.5 percent the previous week, respectively. Since the issue date, the yields on both the Eurobonds have declined by 0.2 percent points.

Yields on all the Kenyan Eurobond yields continued to decline during last week, which has been attributed to improved liquidity in the global markets and lower risk perception as a result of improved investor sentiments based on the stable macroeconomic conditions. This is evidenced by the strong economic growth of 5.7 percent in Q1’2018, compared to 4.8 percent in Q1’2017