Interbank Rate Declines To 2% In October Due To Improved Liquidity

The interbank rate declined to 2.0 percent at the end of October from 6.0 percent in September, pointing to improved liquidity during the month, which the CBK attributed to increased government payments.

During the week, the average interbank rate declined to 2.6 percent from 3.6 percent the previous week. The average volumes traded in the interbank market increased by 10.9 percent to 23.4 billion shillings from 21.1 billion shillings the previous week.

The decline in the average interbank rate points to improved liquidity, which the Central Bank of Kenya partly attributed to increased government payments.

Kenya Eurobonds

The yield on the 5-year and 10-Year Eurobonds issued in June 2014 rose by 0.8 percent points and 0.6 percent points to 4.8 percent and 7.4 percent respectively from 4.0 percent and 6.8 percent in September, attributable to market corrections due to the 0.25 percent hike in the Fed Rate during the month.

During the week, the yields on the 5-year and 10-year Eurobonds issued in 2014 rose by 0.1 percentage points and 0.2 percentage points to 4.5 percent and 7.4 percent from 4.4 percent and 7.2 percent, respectively.

Since the mid-January 2016 peak, yields on the Kenya Eurobonds have declined by 4.3 percentage points and 2.2 percentage 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 both rose by 0.5 percent points to 8.1 percent and 9.1 percent from 7.6 percent and 8.6 percent in September, respectively.

During the week, the yields on the 10-year and 30-year Eurobonds both increased by 0.1 percentage points, to 8.0 percent and 9.0 percent from 7.9 percent and 8.9 percent recorded the previous week, respectively.

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