Yields Low After Emefiele Promised to Reduce Rates 

Nigerian yields seen lower after dovish central bank comments
Dovish central bank comments from Nigeria’s new central bank head are expected to knock yields down in Africa’s largest economy next week, while Kenya’s Treasury bills should see some upward pressure at their next sale.
Yields on Nigerian bonds are seen falling around 50 basis points at an auction next week after new central bank Governor Godwin Emefiele struck a dovish note at his first press conference this week.
Nigerian bonds have fallen 20-50 basis points in the secondary market since Thursday when Emefiele announced the central bank would pursue a gradual lowering of interest rates, a departure from his predecessor’s hawkish policy position.
Emefiele told Reuters on Friday that the bank would not cut rates until after next February’s presidential election.
Nigeria plans to raise 70 billion naira ($428 million) in three and 10-year bonds at an auction on June 11, 35 billion naira each of the papers, maturing in August 2016 and March 2024 respectively.
“It’s a low-yield environment for the fixed income assets and we expect returns to come lower than the prevailing market yields at the auction, based on central bank plans to pursue dovish interest rates,” a dealer at the United Bank for Africa (UBA) said.
Traders said the August 2016 paper is currently fetching 11.35 percent on the market, down from 11.78 percent before Emefiele’s speech on Thursday.

Dealers expect yields on Kenya’s Treasury bills to nudge higher next week when the central bank auctions 12 billion shillings worth of 91-day , 182-day  and 364-day  bills.
At this week’s sale, the weighted average yield on the 91-day paper rose to 9.283 percent from 8.802 percent last week, the central bank said.
The yield on the 182-day Treasury bills jumped to 10.016 percent from 9.888 percent, while that on the 364-day bills slipped to 10.086 percent from 10.248 percent.
“I have seen some upward pressure and the bidding behaviour has been muted. People do not want to buy these shorter papers,” said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
Source: Reuters

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