Kenyan yields to continue to ease
Monday, 13 Feb 2012
The Central Bank of Kenya will auction 91-day and 182-day Treasury bills worth a total 7 billion shillings.
At its sale on Wednesday, the weighted average yield on the 182-day bill eased to 20.024 percent from 20.723 percent in a sale that received bids worth 10.131 billion shillings for the 3 billion shillings on offer. It sold bills worth 4.778 billion shillings.
"We are starting to see decent buying interest. The market has been missing that for quite some time," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
"We are also seeing good liquidity on the money markets and so you might see people wanting to lengthen their investments, starting from the bills going to the bonds."
The weighted average interbank lending rate has fallen to 11.91 percent as of February 8 from 23.55 percent a week before and a high of 30.2 percent in December 27.
Traders said liquidity had also improved, making more money available for commercial banks to invest in government securities.
Last week alone, the central bank mopped up 13.3 billion shillings through repurchase agreements on Wednesday and Thursday.
"The rates will come off. They will start coming off gradually. There is liquidity in the system," said a fixed income trader at one commercial bank.
Traders said they expected the yields on the 91-day and 182-day papers to come in at between 19 and 20 percent.
"We will continue to see some revisions downwards, maybe not extremely aggressive but obviously we are starting to see a correction," Kinuthia said.