Demand for Kenyan Treasuries seen subdued, Nigeria bond yields to dip

Yields on Kenya’s Treasury bills are seen rising to attract investors next week, while yields on Nigeria’s bonds are expected to head lower on an expected surge of demand from local pensions, traders said on Friday.
Demand for Kenyan Treasury bills is expected to be lower at next week’s auctions as investors focus on the extension of an infrastructure bond.
The central bank will offer Treasury bills of all maturities at two separate auctions and worth a combined 12 billion shillings ($134.30 million).
The bank will also offer 20 billion shillings of a 12-year infrastructure bond, known as tap sales. The bond was initially sold on Oct. 22 and drew huge demand.
“I expect subdued interest in the Treasury bill auctions largely due to the ongoing infrastructure tap sales,” said Alex Muiruri, a fixed-income trader at Kestrel Capital.
Muiruri said the yields on the Treasury bills were likely to head higher in order to attract demand from investors who could otherwise put their cash in the infrastructure bond.

Increased liquidity is expected to boost demand for Nigerian local debt next week after state-backed rescue bank Assets Management Company (AMCON) retired about 867 billion naira ($5.24 billion) worth of bonds on Friday.
Yields on the benchmark 10-year bond fell this week after local pensions increased demand for bonds.
Local pensions are expected to play a big role in the market, with most offshore investors remaining on the sidelines due to falling global oil prices and a decline in the value of the naira currency.
“We see an increase in demand from local pensions and other assets managers on account of the huge liquidity in the market arising from the retirement of matured AMCON bond,” one dealer said.
The naira has been under pressure over the past five weeks because of weaker oil prices.
Dealers said yields on the 2024 bond dropped to 12.56 percent this week from 12.62 percent last week, while 2016 yields fell to 12.12 percent against 12.58 percent. The 2022 paper fell to 12.57 percent from 12.66 percent last week.

Leave a Reply

Your email address will not be published. Required fields are marked *