In the money markets, 3-month bank placements ended the week at 7.7 percent (based on what we have been offered by various banks). This is according to the report compiled by Cytonn Investments.
The yield on the 91-day T-bill increased by 6.8 bps to 7.0 percent. The average yield of the Top 5 Money Market Funds increased by 0.2 percentage points to 9.8 percent, from 9.6 percent, recorded the previous week.
The yield on the Cytonn Money Market Fund increased marginally by 0.02 percent points to 10.54 percent, from 10.52 percent recorded the previous week.
Read More: T-Bills Still In The Red, Dropping To 74.2% Last Week
On the top Money Market Funds, Cytonn Money Market Fund is still leading the way with a daily yield of 10.02 percent and an effective annual rate of 10.54 percent.
Zimele Money Market Fund was the second top fund with a daily yield of 9.56 percent and an effective annual rate of 9.91 percent followed by Nabo Africa Money Market Fund with 9.26 percent as daily rate and 9.70 percent effective annual rate.
Here are the top money market funds:
At the same time, rates in the fixed income market have remained relatively stable due to the tightened but sufficient levels of liquidity in the money markets.
The government is 34.8 percent ahead of its prorated borrowing target of Kshs 215.3 bn having borrowed Kshs 290.2 bn of the Kshs 658.5 bn borrowing target for the FY’2021/2022.
“We expect a gradual economic recovery going into FY’2021/2022 as evidenced by KRAs collection of Kshs 476.6 bn in revenues during the first quarter of the current deficit year, which is equivalent to 103.2% of the prorated revenue collection target,” said Cytonn.
However, despite the projected high budget deficit of 7.5% and the lower credit rating from S&P Global to ‘B’ from ‘B+’, we believe that the monetary support from the IMF and World Bank will mean that the interest rate environment may stabilize since the government will not be desperate for cash.