NAIROBI: Yields on Kenya's 91-day Treasury bill raised closer to 19 percent in an undersubscribed auction on Thursday and traders said investors were betting on government's need to meet a borrowing deficit to bid high rates.
Kenya missed its domestic borrowing and revenue collection targets in the first quarter of the 2011/12 (July-June) fiscal year, upset by a tight monetary policy that has heightened a liquidity crunch.
The average yield in the 91-day Treasury bill sale, which registered a 72 percent subscription rate, rose to 18.948 percent from 18.659 percent a week earlier, the central bank said.
"Guys were bidding higher rates because they know the government will be pushed to take them as it tries to meet its domestic borrowing deficit," said Mercy Njoroge, a trader at Tsavo Securities.
The central bank had offered bills worth 4 billion shillings and received bids worth 2.86 billion shillings, a subscription rate of 72 percent. It sold bills worth 2.10 billion.
The bank said it would offer 7 billion shillings' worth of 91-day and 182-day Treasury bills next week.
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