Kenya Shilling Overnight Interbank Average Averaged 9.46% During The Week

During the week, the overnight interbank lending rate, now known as the Kenya Shilling Overnight Interbank Average (KESONIA), eased to an average of 9.46% from 9.54% the previous week.

Interbank activity remained largely steady (+0.53% w/w), averaging KES 11.41bn against KES 11.35bn a week earlier. The slight increase was mirrored in a marginally higher transaction count (+5.0% w/w), with a handful of players resorting to the discount window.

Demand for Treasury bills strengthened, with overall subscription rising to 161.5% from 141.2% in the previous week. Investors submitted bids worth KES 38.77bn, of which the fiscal agent accepted 74.6%, comfortably meeting redemption obligations.

The 91-day paper led the rally, posting a subscription rate of 385.2% (from 146.7% the week prior), marking a shift from last week when investors largely favored the 364-day paper (its subscription rate eased slightly to 202.3% vs 231.0% the week prior).

Weighted average rates on accepted bids were broadly lower, slightly at 7.97% (-1.49bps), 8.02% (-1.37bps), and 9.58% (-3.07bps) for the 91, 182, and 364-day papers, respectively, as the fiscal agent continues to signal a softer near-term interest rate outlook.

In the primary bond market, the fiscal agent remained active, seeking to raise KES 40.0bn through the reopening of FXD1/2018/20 and FXD1/2022/25 (total outstanding amount on the papers at KES 236.3bn). Among the issuances, we expect stronger demand for FXD1/2018/20 given its shorter tenor to maturity and relatively attractive coupon. The two papers remain on offer until 17th September 2025.

As of this week, the Government’s outstanding maturities for the next 12 months stand at KES 989.61bn in T-Bills and KES 265.60bn in T-Bonds. When coupons are factored in, the total maturity profile rises to KES 1.91tn. For September, bond maturities remain limited (IFB/2013/12 – KES 16.06bn that matures on 15th September 2025), a trend that extends through December, affording the government much-needed breathing space on its repayment schedule.

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