The weighted average yield on Kenya’s five-year Treasury bond is expected to rise at auction next week after policymakers raised lending rates for the second time in a month.
The central bank will sell the re-opened bond next Wednesday to raise up to 15 billion shillings ($146.34 million).
“We expect the yield to be between 14 and 14.5 percent,” said John Njenga, a trader at Commercial Bank of Africa, citing the elevated yields on short-term debt like Term Auction Deposits (TADs).
The bond had a yield of 13.193 percent when it was originally sold last month.
The central bank raised rates by 150 basis points for the second time in a month on July 7 after the shilling weakened steeply against the dollar.
Njenga said demand for Treasury bills could remain subdued next week as banks stay on the sidelines opting for the higher yields offered by TADs and other short-term instruments.
