Average Interbank Rates Dips To 3.6 Percent

The average interbank rate declined to 3.6 percent from 4.2 percent the previous week according to stats contained in this week’s Cytonn Report.

The average volumes traded in the interbank market declined by 22.2 percent to 14.3 billion shillings from 18.4 billion shillings the previous week.

The decline in the banking activity during the week was attributed to the reduced demand for liquidity by banks following the beginning of the new Cash Reserve Ratio (CRR) cycle.

The decline in the average interbank rate points to improved liquidity, attributed to large banks trading at lower interest rates.

Kenya Eurobonds

According to Bloomberg, the yield on the 10-Year and 5-year Eurobonds issued in 2014 declined by 0.1 percentage points and 0.6 percentage points to 7.3 percent and 4.2 percent from 7.4 percent and 4.8 percent the previous week.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.6 percent points and 2.3 percent points for the 5-year and 10-year Eurobonds, respectively, an indication of the relatively stable macroeconomic conditions in the country.

Key to note is that these bonds have 0.8-years and 5.8-years to maturity for the 5-year and 10-year, respectively.

For the February 2018 Eurobond issue, during the week, the yields on both the 10-year and 30-year Eurobonds declined by 0.2 percent and 0.1 percent points to 8.0 percent and 9.0 percent from 8.2 percent and 9.1 percent the previous week, respectively.

Since the issue date, the yields on the 10-year and 30-year Eurobonds have both increased by 0.7 percent points.

Finance Bill

The Finance Bill 2018 was signed into law by President Uhuru Kenyatta on Friday 21st September 2018, after Members of Parliament passed the proposed amendments to the Bill.

The President had earlier failed to assent to the Bill, referring it back to the National Assembly for reconsideration due to the reservations he had, mainly on the postponement of VAT on fuel by another 2 years to September 2020 as earlier voted by the National Assembly.