Yields on Kenyan treasury bills may edge higher next week as demand gets crowded out by shorter-dated repurchase agreements, while investors are expected to sell Nigerian bonds to take month-end profits.
KENYA
Kenya’s central bank will auction 9 billion shillings ($104 million) worth of 91-day, 182-day and 364-day Treasury bills, but demand could be muted.
“It looks like we are bottoming out, because as long as the overnight rate is around 8.5 percent or 9 percent, I don’t see why anyone would want to place money for longer,” head of trading at Commercial Bank of Africa, Duncan Kinuthia said.
At this week’s sale, the weighted average yield on the 91-day bill crept up to 8.783 percent from 8.757 percent previously, while the 182-day bill fetched 9.822 percent against 9.812 percent. The 364-day bill inched higher to 10.120 percent from 10.111 percent.
On the overnight lending market, the rate of interest climbed to 8.0899 percent on Wednesday from an April low of 6.7326 percent, partly as the central bank intervened to mop up liquidity.
NIGERIA
Nigeria sold 50 billion naira in 3-year and 10-year bonds this week with yields falling due to strong demand from local pension funds.
Yields on the secondary market also dipped in tandem, but demand has since eased off.
“We see yields rising slightly next week because of the usual month-end profit taking by some investors,” one dealer said.
On the treasury bill market, yields are likely to fall on increased liquidity, extending losses across the board this week at a central bank auction for 3-month, 6-month and one year paper.
