Yields on T-bills seen rising next week

The yields on Nigerian Treasuries are expected to go up at next week’s auction while those of Kenyan debt could remain flat.

NIGERIA

Yields on Nigerian Treasury bills are expected to head higher at next week’s auction in tandem with a rise in yields on the secondary market.

The government plans to issue 70.64 billion Nigerian naira ($435 million) worth of Treasury bills with maturities of three and six months on Wednesday.

“We expect to see yields up at the auction because of tight liquidity which should reduce demand for the short-dated debt notes,” one dealer said.

Bond yields climbed at this week’s auction on the back of lower demand among investors.

The government sold 100 billion naira worth of bonds with maturities ranging between three and 20 years at the auction held on Wednesday.

KENYA

The yields on Kenyan Treasury bills are expected to be stable at next week’s auction mainly due to a liquidity squeeze in the money markets and the central bank’s desire to maintain stability in rates.

The central bank will sell Treasury bills of all maturities for a total of 12 billion shillings ($135 million) and it will also seek to raise another 15 billion shillings through a joint sale of a five-year and 30-year Treasury bonds.

“I expect the Treasury bills to remain fairly flat next week as liquidity largely remains unchanged and the central bank endeavours to maintain rates stability,” said Alex Muiruri, a fixed income trader at Kestrel Capital.

Overnight borrowing rates have remained elevated in the last three weeks due to delays in the government releasing funds for expenditure by departments and local authorities.

“Banks are not going for the (debt) auctions since they don’t have the cash,” said John Njenga, a fixed-income trader at Commercial Bank of Africa.

Njenga said the yield on the five-year bond was likely to come in at 11.2 percent, barely moved from 11.3 percent when the central bank last sold the same bond.

– Reuters