Interbank Rate Slightly Up To 2.9% In 7 Days On Relative Liquidity

Last week, the market remained relatively liquid with the average interbank rate increasing marginally to 2.9 percent from 2.6 percent recorded the previous week.

According to a weekly report by Cytonn, the interbank rate for the week was below the 2019 average of 4.3 percent, supported by government payments.

The week also saw the average interbank volumes increase by 21.1 percent to 4.1 billion shillings from 3.4 billion shillings recorded the previous week.

As per the Central Bank of Kenya, commercial banks’ excess reserves came in at 39.1 billion shillings in relation to the 4.25 percent cash CRR.

The favorable liquidity in recent weeks has also partly been attributable to the reduction of the Cash Reserve Ratio (CRR) to 4.25 percent from 5.25 percent previously, by the Monetary Policy Committee (MPC) during its March 2020 sitting.

The March sitting by MPC consequently freed up additional liquidity to commercial banks for onward lending to distressed borrowers during the COVID-19 pandemic.

Kenya Eurobonds

Kenyan Eurobonds were on a downward trend last week as all bonds saw a decline in yields. Since the jump we saw in March, the investor sentiments have been improving over the past two months.

According to Reuters, the yield on the 10-year Eurobond issued in June 2014 declined by 0.7 percentage points to 6.4 percent from 7.1 percent recorded the previous week.

The yields on the 10-year and 30-year Eurobonds issued in 2018 declined by 0.3 percentage points and 0.2 percentage points to 7.5 and 8.5 percent respectively, from 7.8 and 8.7 percent recorded the previous week, respectively.

The yields on the 7-year and 12-year Eurobonds issued in 2019 also declined by 0.5 percent points and 0.4 percentage points, to 7.2 and 8.2 percent respectively, from 7.7 and 8.6 percent recorded the previous week, respectively.

Money Markets

In the money markets, 3-month bank placements ended the week at 7.5 percent (based on what we have been offered by various banks)

The yields on the 91-day T-bill declined by 17.0 bps to close the week at 7.1 percent from 7.3 percent recorded the previous week.

The average yield of Top 5 Money Market Funds declined marginally to 9.9 percent from the 10.0 percent recorded the previous week.

The yield on the Cytonn Money Market remained unchanged at 10.6 percent, similar to what was recorded the previous week.

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