Yields on Nigerian debt could fall by around 100 basis points next week amid an anticipated surge in demand, while Kenyan Treasury bills are expected to remain steady.
NIGERIA
Yields on government bonds have fallen sharply since opposition leader Muhammadu Buhari won a peaceful presidential election last week in Africa’s biggest economy.
The local Debt Management Office has said it plans to raise 70 billion naira ($352 million) in bonds with maturities ranging between five and 20 years on April 15.
Traders said some investors are selling off at the secondary market ahead of the auction to enable them take fresh positions.
“Counterparties expect next week’s auction yields at 15-15.5 percent levels, so they are selling off all the positions they had bought at low levels so they can buy at auction,” a senior dealer said.
At the previous auction, the debt office sold the five year paper at 16.49 percent, 10-year at 16.84 percent and the 20-year bond was sold at 16.99 percent.
Yields at the secondary market have risen across the board as investors take profit ahead of the auction.
The yield on the 2016 paper rose to 14.96 percent on Friday from 13.85 percent last week, while that on the 2022 debt rose to 14.87 percent against 13.72 percent. The yield on the 2024 debt was trading at 14.81 percent compared with 13.82 percent.
KENYA
Investors are expected to pile into Kenyan Treasury bills next week mainly due to ample liquidity in the money markets, with traders expecting yields to remain steady.
The central bank will sell Treasury bills of all maturities worth a total of 8 billion shillings ($86 million) at two separate auctions.
The yield on the benchmark 91-day bill fell to 8.422 percent at this week’s auction from 8.454 percent last week.
“The market is still liquid so we expect the subscription rates still to be high,” said John Njenga, a trader at Commercial Bank of Africa.
The weighted average interest rate for banks on the overnight market fell to 7.7704 percent on Thursday from 7.9110 percent the previous day, indicating good liquidity.
