Interbank Rate Hits 6.4% From 4.1% in July as Liquidity Declines

The average interbank rate increased to 6.4 percent at the end of July from 4.1 percent at the end of June pointing to declined liquidity during the month the increase was attributed to banks seeking funds for quarterly tax remittances. 

During last week, the average interbank rate increased to 7.2 percent from 4.1 percent the previous week while the average volumes traded in the interbank market declined by 26.8 percent to 12.4 billion shillings from 16.9 billion shillings the previous week.

The increase in the average interbank rate points to declined liquidity, which the Central Bank of Kenya attributed to low Government payments in the early weeks of the fiscal year 2018/2019.

Kenya Eurobonds

According to Bloomberg, the yield on the 5-year and 10-Year Eurobonds issued in June 2014 declined by 1.2 percent points and 1.5 percent points to 4.1 percent and 6.4 percent respectively from 5.3 percent and 7.9 percent in June.

During the week, the yields on the 5-year and 10-year Eurobonds issued in 2014 both rose by 20 bps to 4.1 percent and 6.6 percent from 3.9 percent and 6.4 percent respectively.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.7 percent points and 3.1 percent points for the 5-year and 10-year Eurobonds, respectively, due to the relatively stable macroeconomic conditions in the country.

During the month, the yields on the 10-year and 30-year Eurobond issued in February 2018 declined by 70 bps to 7.1 percent and 8.1 percent from 7.8 percent and 8.8 percent in June respectively. This was a result of improved liquidity in the global markets and lower risk perception as a result of improved investor sentiments based on the stable macroeconomic conditions.

During the week, the yields on the 10-year and 30-year Eurobonds both increased by 10 bps and 20 bps respectively, to 7.2 percent and 8.3 percent from 7.1 percent and 8.1 percent last week respectively.

Since the issue date, the yield on the 10-year Eurobond has declined by 1 bps points while the 30-year Eurobond has increased by 10 bps