Kenya T-bill yield falls to 8.954pc

NAIROBI: The weighted average yield on Kenyan 91-day Treasury bills fell to 8.954 percent on Thursday's and traders said they expected it to keep falling in coming auctions.

The Central Bank of Kenya said in a statement that the 91-day T-bill edged down from 8.988 percent previously.

Traders said T-bill yields will continue edging down as the government was keen on keeping interest rates down.

"The pressure for the government to give any paper for any rate is not there anymore. We are most likely to see those rates coming down and stabilising at between 7.0-8.0 percent," said Fred Mweni, the chairman for the Bonds Traders Association.

"Every investor is looking to see on how the MPC is going to decide next Tuesday, but the expectation is that they will leave the rates as they are."

Kenya's Monetary Policy Committee (MPC) raised the key central bank rate by 25 basis points to 6.25 percent in May, to stabilise the exchange rate.

The central bank had offered bills worth 2.0 billion shillings ($22.28 million). It received offers worth 4.126 billion shillings, a 206 percent subscription rate, and accepted bids worth 4.075 billion shillings.

"Many people are trying to invest in T-bills dragging yields down, but there are still some gains in them," said Duncan Kinuthia, a trader at Commercial Bank of Africa.

"Investors activity is cumulative towards the short end as they don't want to put their money in certain long term tenors."

Next week the bank will offer 91-day Treasury bills worth 2 billion shillings and 182-day Treasury bills worth 3 billion shillings, the bank said.

Copyright Reuters, 2011