Kenya T-bill yields may fall, Nigeria yields to rise

NAIROBI: Kenyan Treasury bill yields may fall next week in over-subscribed auctions, while Nigerian yields may rise on lower demand, traders said.

KENYA

In Kenya, the central bank will auction next week 91-day , 182-day and 364-day Treasury bills worth a total of 9 billion shillings ($104.03 million). At this week's sale, the weighted average yield on the 91-day Treasury bills eased to 8.852 percent from 8.882 percent last week.

Yields on the 182-day paper fell to 9.871 percent from 9.924 percent. Yield on one-year bills fell to 10.317 percent from 10.379 percent. "I reckon we most likely have an over subscription, (interest) rates to come down as people try to lock in their money. We also wait to see what bond will be offered next month," said a senior trader at one commercial bank.

The trader said the trend was likely to continue in coming weeks, saying that in the next three weeks, the central bank has to redeem maturing paper worth about 35 billion shillings, which will increase liquidity in the money markets.

"There is still a lot of good money coming in which has to be invested somewhere," the trader said.

NIGERIA

Yields on Nigerian bonds are expected to rise slightly toward 14 percent next week as demand for the debt falls after of monetary tightening by the central bank. The central bank kept interest rates on hold for the 15th time in a row on Tuesday but raised its cash reserves requirement on private sector deposits by 300 basis points, to 15 percent.

Traders said they expected new tightening while liquidity in the market remained strong.

"Yields have dropped in the wake of expectations that central bank would embark on aggressive liquidity mopping-up after its monetary policy committee announced a fresh tightening, but this has not been so," one dealer said.

Dealers said yields have fallen to an average of 13.95 percent across the board, halting a sell-off by offshore investors. With expected resumption of aggressive liquidity mop-up next week, yields are seen climbing to around 14 percent on the long-tenor debt notes, traders said.