31st October, 2015
Yields on Kenyan Treasury bills are likely to dip again next week, while rates on Nigerians paper were expected to rise as offshore investors sell.
KENYA
Yields on Kenyan T-bills are likely to slip next week, with extra shilling liquidity chasing the instruments and the central bank sending what traders saw as a signal that it would not accept the high rates seen earlier this month.
Yields on all T-bill tenors rose above 22 percent last week. But the central bank accepted lower bids at this week’s heavily oversubscribed auctions, with rates close to 21 percent on 182-day and 364-day bills and below 20 percent on 91-day paper.
“They are not taking such high rates. That is a very strong message,” said one fixed-income dealer. “Facing the risk of your money being returned, that may lead to a drop in the rates.”
NIGERIA
Yields on Nigeria’s local currency denominated bonds are expected to rise next week as offshore investors and some local investors sell holdings.
“We are anticipating a massive sell off next week from some offshore investors still holding their positions in the market,” one dealer said, adding some local pension funds could follow suit.
JP Morgan is expected to remove Nigerian bonds from its Emerging Market Government Bond Index (EM-GBI) by the end of October, prompting the shift out.
Yields on the benchmark 2024 paper dropped to 13.49 percent on Friday from 13.60 percent last week, but are seen rising above 14 percent level next week.
“A sell-off either by the remaining offshore investors in the market or pension funds ahead of the auction on Nov. 11, would lead to increased yields in the near term,” a senior treasurer said.