Nigeria’s debt market could take its cue from the central bank’s rate decision due later on Friday, while Kenyan Treasury bill yields could follow overnight interbank lending rates higher.
NIGERIA
Bond yields fell across some of the heavily traded maturities this week due to strong buying pressure from investors covering their positions after the Debt Management Office sold fewer than expected bonds last week.
Nigeria sold bonds worth 44 billion naira ($221 million) at auction last week, short of the target of 70 billion naira initially set by the debt office.
“The market has been bullish because some investors were covering their over-sold positions prior to the last auction because the debt office sold below market expectations,” one dealer said.
“We are expecting that the outcome of the rate decision at today’s MPC will drive the market going forward. If nothing changes, then the market will continue to hover around the present level,” another dealer said.
Yields fell the most on the longest tenor 2034 debt, down to 14.36 percent on Friday, from 14.85 percent on Monday.
The benchmark 2024 paper fell to 14.82 percent from 14.91 percent, while the 2022 debt fell to 14.79 from 14.91 percent.
KENYA
Kenya’s Treasury bill yields could track overnight interbank lending and the central bank’s term auction deposits rates higher.
The central bank has capped the weighted average yield on its 14-day, 21-day and 28-day term auction deposits – used to manage liquidity in the money markets – at 14 percent.
Due to tight shilling liquidity, the average interbank lending rate shot up to 16.3769 percent on Thursday from 12.7576 percent last Thursday.
“I think the rates are going to continue going up for a while. If you look at where the term auction deposits rate is at, and overnight is, the rates are bound to go up,” a fixed income trader at one securities brokerage company said.
Next week the central bank will auction 91-day, 182-day and 364-day Treasury bills worth a total 11 billion shillings ($109 million).
At this week’s sale, the weighted average yield on the 182-day Treasury bill rose to 12.431 percent from 12.153 percent last week, while that on the 364-day bill jumped to 13.034 percent from 12.532 percent last week.
The yield on the 91-day bill rose to 11.486 percent from 11.327 percent last week.
Reuters
