Headlines

Kenyan Banks Continue To Account Largest Lenders To GoK At 45.21%

BY Standard Investment Bank · October 30, 2023 09:10 am

KEY POINTS

The Central Bank persisted in its commitment to bolster liquidity for entities facing constraints by injecting over KES 100bn through 7-day reverse repo purchases – marking the highest injection this year thus far.

Banking institutions continue to account for the largest share of domestic debt, standing at 45.21% as of 19^th October 2023, followed by pension institutions which held 31.32%.

Holding by retail investors crossed the 10% mark, coming at 10.25%, a 382bp rise since the year began.

See below a chart showing Kenya’s domestic debt by holder;

Debt

During the week, liquidity in the money market tightened further, as the average interbank rate increased to 12.59%, from 12.47%, the previous week, largely due to increased settlements as opposed to receipts.

Simultaneously, the average traded volumes, contracted by 24.67% to KES 13.63bn, compared to the previous week’s KES 18.09bn.

The table below summarizes the market liquidity indicators:

We suspect that this injection was prompted by the liquidity challenges arising from the maturation of a similarly substantial reverse repo purchase from the previous week.

See a summary of the offering below;

During the week, Treasury bills were undersubscribed reflecting the tightened liquidity in the money market. The Central Bank received a total of KES 18.15bn in bids, resulting in an overall subscription rate of 75.63%, down from 123.39% the previous week.

Interestingly, investor participation in the 182-day paper increased, causing a decrease in the proportion of bids directed towards the 91-day paper, which dropped from 79.55% in the previous week to 58.61%.

Ultimately, KES 15.65bn worth of bids were accepted, translating to an acceptance rate of 86.25% – the 91-day paper recorded the lowest acceptance rate due to higher bidding rates by investors. See below a summary of the performance;