Secondary Turnover Dips By 31.54% Last Week As Interbank Rate Ups 6.03%

Secondary market turnover declined 31.54 percent w/w to close at 6.93 billion shillings with trades mainly on the long end of the yield curve coupled with infrastructure bonds.

There was marked liquidity tightness in the week which dampened the uptake of the short-end papers. This also impacted negatively the TAP Sale of IFB1/2018/20yr.

The regulator accepted bids totaling 8.73 billion shillings against 22.41 billion shillings on offer.  Overall net domestic borrowing stands at 98.63 billion shillings, below its pro-rated target which increases the probability of a shorter maturity bond in the December sale.
Kenyan Shilling Vs The US Dollar

The local currency was relatively calm in the week trading within 102.50 – 102.70 levels. This was partly attributed to the CBK open market operations that mopped KES liquidity.

Usable foreign exchange reserves held at the central bank increased by USD 9Mn to USD 8.04 billion equivalent to 5.32 months of import cover.

Money Market:

The average interbank rate increased by 128bps to 6.03 percent in the week attributed to the tight liquidity in the market.

The regulator also acted as the lender of last resort via its discount window facility in the course of the week. The weekly volumes traded in the interbank market declined by 23.25 billion shillings to 113.18 billion shillings.

This Week’s Outlook:
For this week, market analysts expect subdued secondary market activity in the week with a dearth in short-end bond supply.

This will be further compounded by the tight liquidity in the market which has clipped appetite for the shorter duration papers.