Regulatory Alerts2016-10-25
Banking Circular No 9 of 2008 - Revision of the rediscount rates methodology for government securities
This Banking Circular No.9 of 2008 addresses the revisions in the Treasury Bill Rediscount Rate methodology. The Central Bank has decided to de-link this rate from the CBR, which is a Monetary Policy signalling instrument, and align it with market value. For the 91-day bill, the new rate will be 3 percentage points above the prevailing average, and for the 182-day bill, the rate will be 3 percentage points above the respective 182-day Treasury Bills' average rate. The changes are immediate, while the rates for Treasury Bonds remain as stated in their respective bond issues' prospectus.
BANKI KUU YA KENYA Haile Selassie A P. O. Box 60000 - 00200 Nairobi K Telephone: 2860000 Telex: 22 16th December 2008 BANKING CIRCULAR NO.9 OF 2008 TO: ALL CHIEF EXECUTIVES OF COMMERCIAL BANKS REVISION OF THE REDISCOUNT RATES METHODOLOGY FOR GOVERNMENT SECURITIES: This has reference to Banking Circular No.6 of 2006 that set the Treasury Bills Rediscount Rate to be equal to the Central Bank Rate (CBR). The Central Bank has found it necessary to review and revise the Treasury Bill Rediscounting rate first in order to de-link it from the CBR which is a Monetary Policy signalling instrument and second, in order to align it with the market value of the underlying securities. Consequently, it has been decided that the Rediscount Rate for the 91-day Treasury bill will be 3 percentage points above the prevailing 91-day average rate. Similarly, the Rediscount Rate for the 182-day Treasury bill will be 3 percentage points above the prevailing average rate of the 182-day Treasury Bills. These changes take effect immediately.
The Rediscount rates for Treasury Bonds remain as stated in the prospectus of each respective Bond issue.
JOHN K. BIRECH ASSISTANT DIRECTOR, BANKING SERVICES DEPARTMENT