Regulatory Alerts2016-10-25 | 222905731Banking Circular No 9 of 2008 - Revision of the rediscount rates methodology for government securities
The Central Bank of Kenya has decided to revise the Treasury Bill Rediscounting rate, delinking it from the Central Bank Rate and aligning it with the market value of the underlying securities. The new rates for the 91-day and 182-day Treasury bills will be 3 percentage points above their respective prevailing average rates. These changes are effective immediately, while the rediscount rates for Treasury Bonds remain unchanged as stated in their prospectuses.
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