Yields on Kenyan T-bills seen flat

Yields on Kenyan Treasury bills are seen little changed next week as a rise in government borrowing squares off with excess liquidity in the market.

Dealers expect yields on Kenya’s Treasury bills to be flat next week when the central bank auctions 12 billion shillings’ ($136.60 million) worth of paper.

At this week’s sale, the weighted average yield on the 91-day paper dipped to 9.275 percent from 9.283 percent last week, while the yield on 182-day bills rose to 10.323 percent from 10.016 percent. That on the 364-day paper climbed to 10.239 percent from 10.086 percent.

Next week the central bank plans to issue a new 5-year bond, and reopen an existing 20-year bond to raise up to 30 billion shillings.

The central bank last month ramped up its weekly borrowing on 91-, 182-, and 364-day Treasury bills from 9 billion shillings to 12 billion after the government revised its domestic borrowing requirement.

Mathangani Kariuki, debt analyst at African Alliance, said the central bank’s greater funding requirement is expected to offset excess liquidity in the market, which has been putting downward pressure on yields.

The overnight interbank lending rate fell to 3.4804 percent on Thursday from 6.8778 percent a week earlier.

“The central bank needs to pick up most of what comes through so I think that will prop up the rate,” Kariuki said.