JOHANNESBURG: Nigerian bond yields are likely to fall at an auction next week on strong local investor demand, while a liquidity squeeze in Kenya is expected to keep Treasury bill yields high.
NIGERIA
Yields on Nigerian bonds are expected to drop at an auction next week in line with prevailing rates on the secondary market amid demand from local fund managers ahead of their financial year-end. Nigeria's Debt Management Office will sell 65 billion naira ($410.09 million) in 3- and 20-year maturities on Nov. 13.
Traders said healthy demand at next week's auction should push yields lower to around 12.5 percent and 12.95 percent respectively on the two instruments.
At the last auction the 3-year paper was sold at 13.04 percent, 46 basis points lower than the 13.5 percent at the previous sale, while the 20-year bond yielded 13.26 percent, down 43 basis.
"More local fund managers are willing to rev up their demand at the auction next week, which will result in lower returns on the paper," one dealer said.
Yields were mixed on the secondary market this week. The June 2022 bond was trading at 12.53 percent on Friday compared with 12.31 percent last week, the April 2017 paper was at 12.4 percent, from 12.43 percent, and the June 2019 paper was at 12.5 percent from 12.43 percent.
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