• Saturday, May 25, 2024
businessday logo


AFRICA DEBT: Prices of Nigerian Treasury bonds likely to pick up next week

The yields on Kenyan Treasuries are expected to inch up at auction next week while prices of Nigerian Treasury bonds are expected to experience a correction.


Prices of Nigerian Treasury bonds are likely to pick up next week after being driven lower by investors taking profits in the wake of naira depreciation and concerns over falling oil prices on the global market.

“We expect that some investors would come into the market at this level to take advantage of the low price after weeks of a bearish run,” one dealer said.

Yields on the major debt notes have risen by as much as 20 basis points this week alone as offshore investors stayed on the sidelines, while some local pension funds cut their positions.

The bonds maturing in 2022 fetched 12.28 percent on Friday, up from 12.11 percent last week, the bond dated 2024 closed at 12.39 percent up from 12.17 percent, while the 2034 Treasury bond closed at 12.29 percent, from 12.23 percent.

Nigeria’s central bank kept its benchmark interest rate at 12 percent at a meeting last week on concerns about increased liquidity and rising inflation in Africa’s biggest economy.


Yields on Kenya Treasury bills are expected to rise marginally as pressure from increased shilling liquidity evens out increased government appetite for borrowing.

Next week, the central bank will auction 91-day, 182-day and 364-day Treasury bills worth a total of 12 billion shillings ($135 million).

During this week’s auctions, the weighted average yield on the 91-day Treasury bill rose to 8.653 percent from 8.637 percent last week, the central bank said.

The yield on the 364-day bill jumped to 10.357 percent from 10.276 percent, while that on the 182-day bill increased to 8.741 percent from 8.604 percent.

Traders said increased liquidity in the money markets is putting downward pressure on yields, but this was being countered by increased government borrowing.

“Subscription rates will be high, yields will edge up. We are going to see short-term rise in interest rates, mostly because of the Treasury’s appetite,” Fred Moturi, fixed income trader at Sterling Investment Bank, said.

On Friday, the central bank mopped up 15 billion shillings using seven-day repurchase agreements at a weighted average rate of 8.241 percent.

“As you can see, CBK again, is in the market to mop liquidity,” Robert Gatobu, a trader at Bank of Africa, said.