Kenya T-bill yield inches up

NAIROBI: The yield on Kenya's 91-day Treasury bills rose slightly to 8.999 percent at this week's auction while demand fell, the central bank said on Thursday.

The bank said the sale, which was for 2 billion shillings ($22.31 million), was oversubscribed by 8 percent, with the bank accepting just 1.2 billion shillings of the 2.2 billion shillings that investors offered.

At last week's auction of equivalent paper, the bank sold 4.075 billion shillings at 8.954 percent.

The east African nation also struggled to auction 182-day Treasury bills on Wednesday, selling just 19 percent of its offering, while the yield inched down to 9.845 percent from 9.854 percent in the previous sale.

The weak demand likely reflected an acute liquidity squeeze.

The central bank, which raised its overnight lending rate to 8 percent on June 29 to stem a sharp decline in the Kenyan shilling against the dollar, cut the rate to 6.25 percent on Tuesday but imposed tough new conditions for banks using its discount window.

Kenyan yields have been rising this year on the back of higher inflation that has forced policymakers to raise benchmark interest rates and to restrict borrowing by banks.

The bank said it will offer another 2 billion shillings in 91-day Treasury bills at next week's auction.

Copyright Reuters, 2011