Investors in Kenya shun 91-day T-bill as yields tumble

Investors kept off Kenya's 91-day indicative Treasury bill this week as yields hit a low of 8.6 percent.

The paper, which last week attracted thrice as much as the 40 million U.S. dollars the Central Bank of Kenya (CBK) had floated, raised slightly over half of the amount sought in this week's auction.

The CBK, as in previous weeks, offered bills worth 40 million U.S. dollars, but received bids worth 25 million dollars as investors searched for higher returns in the 182 and 364 days bills.

During the auction, interest rate on the bill fell by 0.2 percentage points to 8.6 percent.

Interest rate on the bill had hit a high of 12 percent end of January, raising the appetite of investors.

But as with other bills, it has been falling as the CBK seeks to keep commercial banks rate down and reign in on inflation. With the 91-day bill unattractive, investors trooped to the 182 and 364 day papers.

The CBK floated 182 and 364 days bills worth 59 million dollars each as in the previous weeks.

"The total number of bids received was 126 million dollars representing a subscription of 213 percent and 120 million dollars, a subscription of 203 percent for the 182 and 364 days bills respectively," John Birech, the acting director of the financial markets in a brief on the auction said Saturday.

The regulator accepted bids amounting to 86 million dollars for the 182-day bills and 115 million dollars from the 364-day bills.

Yields on the 182-day bill stood at 10.5 percent, a drop from 10.9 percent last week, while for the 364-day bill went down to 12 from 12.2 percent.

Analysts expect yields on the short-term papers to fall further in the coming weeks, with that of the 91-day bill crossing to 7 percent.

This will slow down intensified borrowing that has raised the East African nation's domestic debt to 16 billion dollars, with 1 billion dollars being borrowed in February as the government sought funds for budgetary support. Endit