NAIROBI (Xinhua) --
A low interest rate environment in
Kenya following the introduction of a ceiling on bank charges
has helped to keep yields on government securities down,
analysts have noted.
The yields on Kenya’s Treasury
bills have declined significantly, with that of the benchmark
91-day bill hitting five-year low.
"The 91-day T-bill is currently trading at a yield of 7.4
percent, which is below its five-year average of 9 percent.
"The declined yield is attributable to the low interest rate
environment that has been experienced since the passing of the
law capping interest rates," Cytonn, a Nairobi-based investment
firm, said in a brief on Monday.
Similarly, the yield on the 364-day paper has hit an all-time
low of 9.5 percent from 14 percent months back while the
interest rate on the 182-day paper stands at 8.4 percent, from
Cytonn observed that it expected the yields to continue to
fall due to two reasons.
First, the Central Bank’s Monetary Policy Committee has
maintained its benchmark lending rate at 9 percent and is likely
to remain at the level when the team meets this month.
"The Central Bank has also moved to instill discipline in the
market and stabilize interest rates by rejecting aggressive bids
that are priced above market for both T-bills and T-bonds," said
Cytonn, noting the low yields have affected uptake of the
securities, with most offers recording under-subscription.