Africa Market Update -December 2014

MARKET UPDATE – AFRICA | November 2014
We expect the
Central Bank to
continue mopping
up excess liquidity
from the market
with a view
to supporting
the shilling. It
will, however,
be a fragile
balancing act as
there is need to
boost exports’
competitiveness
following
depressed global
commodity prices
in the first half
of 2014 that
threatens fiscal
implications.
Interbank Rate
Source: Bloomberg, StratLink Africa
The rate touched a low of 6.3% on November
14th, 2014 after which it began nudging
upwards. The market, however, remains
liquid driven by net government payments.
Uptake of the 91 Day T-Bill paper has risen
by 100.0% between October and November
2014, pointing at an increase in liquidity in
the market.
91 Day T-Bill Average Bid-to-cover Ratio
November 2014 Fifteen Year Reopened
Bond
Description
Amount
Offered (USD Mln) 166.7
Received (USD Mln) 132.2
Performance Rate 79.3%
Yield 12.4%
Source: Central Bank of Kenya, StratLink Africa
We expect the Central Bank to continue
mopping up excess liquidity from the market
with a view to supporting the shilling. It
will, however, be a fragile balancing act as
there is need to boost exports’ competitiveness
following depressed global commodity
prices in the first half of 2014 that threatens
fiscal implications. Diaspora remittances
were marginally depressed in September
2014, 1.1% lower that August 2014’s 128.8
million, further inflicting downward pressure
on the shilling.
Kenya Shilling vs US Dollar Exchange
Source: Central Bank of Kenya, StratLink Africa
The re-opened fifteen year bond (FXD
1/2010/15) also registered under-subscription
in what is likely to have been driven by a
low coupon rate. At 10.0%, the paper’s coupon
rate stood 218.0 bps below the fifteen
year paper issued in February 2014 that registered
a performance rate of 234.4%.
Source: Bloomberg, StratLink Africa
The local unit breached the 90.0 psychological
exchange rate against the greenback
on November 11th, 2014. The shilling shed
1.2% and 4.2% month-on-month and yearon-year,
respectively to close November
2014 at 90.1 units to the greenback.
6 | StratLink Africa Ltd.
www.stratlinkglobal.com