T-Bills: Nigerian yields seen falling, Kenyan steady

Yields on Nigerian debt are expected to fall in the week ahead while those in Kenya are seen steadying, traders said.

NIGERIA

Yields on Nigerian treasury bills are likely to drop slightly at next week’s auction as the market gradually responds to the new central bank governor’s move to lower interest rates.

Governor Godwin Emefiele has stated his plans to see interest rates lower in the medium term in a bid to stimulate productivity in Africa’s biggest economy.

Nigeria plans to raise 195.17 billion naira ($1.21 billion) in treasury bills on Wednesday as part of its usual short-dated debt issuance to plug the budget deficit.

“We see yields coming down gradually in the medium term to long term in line with the expectations of the new central bank governor,” one dealer with United Bank for Africa said.

Yields on the short-dated debt have fallen marginally at the previous auctions since June as investors switched assets from money market instruments to fixed assets.

KENYA

The yields on Kenya’s Treasury bills are expected to hold steady or fall slightly at next week’s auction, while the sale could be oversubscribed, traders said.

The central bank will offer for sale 91-day, 182-day and 364-day Treasury bills worth a total 12 billion shillings ($136.63 million).

At this week’s sale, the weighted average yield on the 91-day Treasury bills fell to 8.475 percent from 8.694 percent last week, while that on the 182-day bills fell to 9.296 percent from 10.060 percent.

The yield on the 364-day Treasury bills was unchanged at 10.330 percent.

Traders said they expect the rates to hold or fall slightly, thanks to the central bank wish to keep rates low, despite a possibility of increased subscription to the sales.

“As it is next week we will actually have a net inflow of about 5 billion shillings from the T-bill front. They are looking for 12 billion shillings, and we have about 17 billion shillings maturing,” said a trader at one commercial bank.

“So in that space, we can still expect another slight dip. We know the signal is clear, but it depends on the central bank, how they act.”

Another trader at a separate bank said that with the year-on-year inflation rate going up slightly to 7.67 percent in July from 7.39 percent in June, there would be pressure keeping the yields falling further.

Reuters