Secondary Turnover Regressed 23.3% Last Week

Secondary market turnover regressed 23.4 percent w/w to close at 7.64 billion shillings buoyed by trades on the long and medium term segments of the yield curve.

The top five traded bonds accounted for 67.2 percent of the total turnover, with the top traded issue, IFB 1/2018/20 accounting for a fifth of total activity.

“Our expectations around the 2-year and 15-year bond issue for this month stand at 10.75 – 10.90% and 12.85 percent +/- 10bps, respectively,” said analysts from Genghis Capital.

“But we are keeping an eye on the 2-year bidding expectations which could come in closer to the lower bound on account of the heavy liquidity in the market,” added Genghis Capital.

Shilling Vs the Dollar

The local currency remained relatively unchanged during the week supported by dollar inflows from diaspora remittances coupled with the tightening liquidity in the money market which offset dollar demand from merchant and oil importers.

Usable foreign exchange reserves held at the central bank rose by USD 64Mn to USD 8.05 billion equivalent to 5.27 months of import cover.

Money Market:

The average interbank rate declined by 60bps to 2.52 percent compared to 3.12 percent the previous week as the average daily volume traded rose 34.1 percent to 14.4 billion shillings. The high liquidity in the money market persisted as commercial banks began the new CRR cycle.

The Week’s Outlook:
Market analysts expect an improved weekly trading session as the money market remains liquid.

The expectations around the 2-year and 15-year bond issue for this month stand at 10.75 – 10.90 percent and 12.85 percent +/- 10bps, respectively.