3-month bank placements ended the week at 7.7 percent. The yield on the 91-day T-bill increased by 5.7 bps to 7.1 percent.
The average yield of the Top 5 Money Market Funds remained relatively unchanged at 9.8 percent while the yield on the Cytonn Money Market Fund increased by 0.1 percentage points to 10.7 percent, from 10.6 percent recorded the previous week.
Cytonn Money Market Fund is still the leading money market fund in Kenya with an effective annual rate of 10.66 percent followed by Zimele Money Market Fund with an effective annual rate of 9.91 percent.
Nabo Africa Money Market Fund is the third best-performing money market fund in Kenya with an effective annual rate of 9.70 percent followed by Sanlam Money Market Fund with an effective annual rate of 9.36 percent.
Madison Money Market Fund follows closely with 9.25 percent effective annual rate followed by CIC Money Market Fund with 9.05 percent. Apollo Money Market Fund has an effective annual rate of 8.95 percent.
Co-op Money Market Fund has an effective annual rate of 8.75 percent while GenCapHela Imara Money Market Fund and Dry Associates Money Market Fund had 8.75 and 8.61 percent effective annual rates respectively.
Rates in the fixed income market have remained relatively stable due to the sufficient levels of liquidity in the money markets despite the huge debt appetite by the government.
The government is 16.4 percent ahead of its prorated borrowing target of 240.6 billion shillings having borrowed 280.1 billion shillings of the 658.5 billion shillings borrowing target for the FY’2021/2022.
“We expect a gradual economic recovery going into FY’2021/2022 as evidenced by KRAs collection of 631.1 billion shillings in revenues during the first four months of the current fiscal year, which is equivalent to 104.5 percent 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.