Nairobi, May 28 : Treasury Bills (T-bills) were oversubscribed for the third consecutive week, with the overall subscription rate coming in at 142.4 percent for the week ended May 23, albeit lower than the subscription rate of 179.7 percent recorded the previous week.
Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 4.5 billion against the offered Kshs 4.0 billion, translating to a subscription rate of 113.2 per cent, significantly lower than the oversubscription rate of 202.2 per cent, recorded the previous week.
The subscription rates for the 182-day increased to 113.9 per cent from the 53.6 per cent recorded the previous week, while the 364-day papers decreased to 182.7 per cent from the 296.8 per cent respectively recorded the previous week.
The government accepted a total of Kshs 29.9 billion worth of bids out of Kshs 34.2 billion bids received, translating to an acceptance rate of 87.6 Per cent.
The yields on the government papers registered a mixed performance with the yields on the 91-day paper decreasing the most by 4.7 bps to 8.3 per cent from the 8.4 per cent recorded the previous week.
The yields on the 182-day paper decreased by 0.8 bps to 8.57 per cent from the 8.58 per cent recorded the previous week while the yields on the 364-day paper increased by 0.04 bps to remain relatively unchanged from the 10.0% recorded the previous week.
Money Market Performance.
In the money markets, 3-month bank placements ended the week at 10.1% (based on what we have been offered by various banks) and the yields on the government papers registered mixed performance with the yields on 91-day paper decreasing by 4.7 bps to 8.3% from 8.4% recorded the previous week.
The yields for the 364-day papers increased by 0.04 bps to remain relatively unchanged from the 10.0% recorded the previous week.
The average yields on the Top 5 Money Market Funds decreased by 1.4 bps to close the week at 13.4%, relatively unchanged from the previous week.
The top 10 Best Performing Money Market Funds were as follows, with Effective Annual Rate in %.
Gulfcap Money Market Fund 13.9%
Cytonn Money Market Fund 13.6%
Kuza Money Market fund 13.3%
GenAfrica Money Market Fund 13.1%
Ndovu Money Market Fund 13.1%
Arvocap Money Market Fund 13.1%
Etica Money Market Fund 12.9%
Lofty-Corban Money Market Fund 12.8%
Enwealth Money Market Fund 12.1%
Old Mutual Money Market Fund 12.0%
Liquidity.
During the week, liquidity in the money markets marginally tightened, with the average interbank rate increasing by 1.8 bps, to remain relatively unchanged from the 9.9% recorded the previous week, partly attributable to government payments that were offset by tax remittances. The average interbank volumes traded decreased by 32.6% to Kshs 5.0 bn from Kshs 7.5 bn recorded the previous week.
KENYA EUROBONDS.
During the week, the yields on Kenya’s Eurobonds registered a mixed performance with the yield on the 30-year Eurobond issued in 2018 increasing the most by 13.1 bps to 11.0% from the 10.9% recorded the previous week while the yield on the 7-year Eurobond issued in 2019 decreased by 13.1 bps to 7.7% from the 7.8% recorded the previous week.
KENYAN SHILLING.
The Kenyan Shilling appreciated marginally against the US Dollar by 3.4 bps in the week ended May 22, 2025 to remain relatively unchanged from the Kshs 129.3 recorded the previous week.
On a year-to-date basis, the shilling has appreciated by 4.0 bps against the dollar, compared to the 17.4 per cent appreciation recorded in 2024.
We expect the shilling to be supported by :
Diaspora remittances ; Standing at a cumulative USD 4,997.2 million in the twelve months to April 2025, 12.1% higher than the USD 4,457.5 million recorded over the same period in 2024. These has continued to cushion the shilling against further depreciation. In the April 2025 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 59.6% in the period.
The tourism inflow receipts ; which came in at Kshs 452.2 billion in 2024, a 19.8% increase from Kshs 377.5 billion inflow receipts recorded in 2023, and owing to tourist arrivals that improved by 14.6% to 2,394,376 in 2024 from 2,089,259 in 2023.
Improved forex reserves currently at USD 10.3 billion (equivalent to 4.6-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover and at par with the EAC region’s convergence criteria of 4.5-months of import cover.
The shilling is however expected to remain under pressure in 2025 as a result of:
An ever-present current account deficit which came at 3.1% of GDP in the twelve months to February 2025
The need for government debt servicing, continues to put pressure on forex reserves given that 62.0% of Kenya’s external debt is US Dollar-denominated as of December2024.
Key to note, Kenya’s forex reserves increased by 1.4% during the week, to USD 10.3 bn from USD 10.2 bn recorded in the previous week, equivalent to 4.6 months of import cover (based on updated import data), from the 4.5 months of import cover recorded last week, and above the statutory requirement of maintaining at least 4.0-months of import cover.
