Interbank Rate For Last Week Rises To 6.6 Percent

Last week, liquidity was relatively favorable despite the average interbank rate increasing to 6.6 percent from 6.4 percent recorded the previous week, following the end of the previous month’s Cash Reserve Requirement (CRR) cycle on 14^th September.

Pressure on liquidity however emanated from tax payments during the week with VAT having been due on 20^th September.

The commercial banks’ excess reserves increase came in at 11.4 billion shillings in relation to the 5.25 percent cash reserves requirement (CRR), from 4.1 billion shillings the previous week.

The average volumes traded in the interbank market declined by 46.2 percent to 5.4 billion shillings from 10.1 billion shillings the previous week.

Kenya Eurobonds

According to Reuters, the yield on the 10-year Eurobond issued in 2014 increased by 0.1 percentage points to 5.3 percent during the week, from 5.2 percent the previous week.

The rise in Eurobond yields in the past two weeks has been attributable to news that global rating firm Moody’s could further lower Kenya’s creditworthiness currently at ‘B2 stable’ following the completion of their periodic review on Kenya, where they raised concern over the country’s very low fiscal strength, ballooning debt and rampant corruption.

During the week, the yield on 2018, 10-year and 30-year Eurobond both increased by 0.2 percentage points to 6.6 percent and 8.0 percent from 6.4 percent and 7.8 percent recorded the previous week, respectively.

During the week, the yield on the 7-year Eurobond rose by 0.1 percentage points to 6.2 percent from 6.1 percent recorded the previous week, while the yield on the 12-year Eurobonds rose by 0.2 percentage points to come in at 7.3 percent from 7.1 percent recorded the previous week.