Demand for Kenyan Treasuries, Nigerian bonds expected to rise next week

Demand for Kenyan Treasury bills is expected to rise at next week’s auction as debtholders seek to re-invest debt that is maturing on August 25, market participants said on Friday.

KENYA

The Central Bank of Kenya will offer a total of 12 billion shillings ($136.05 million) for the 91-day, 182-day and 364-day Treasury bills in two separate auctions next week.

“I’m seeing improved subscriptions in the Treasury bills auctions next week, fuelled by the hefty

debt redemptions and coupon payments on Monday,” said a fixed-income trader with a Nairobi brokerage.

At least 13.2 billion shillings is expected to come into the market on Monday from debt redemptions and coupon payments by the central bank.

Traders said they expected yields to be fairly stable with most investors opting for the one-year Treasury bill because the difference between its yield and that of the six-months bill is fairly attractive at one and a half percentage points.

NIGERIA

Demand for Nigeria’s bonds is seen rallying next week across the board from both local and offshore investors, driven by the planned inclusion of Africa’s biggest economy’s 2024 bond in JP Morgan’s Government Bond Index.

JP Morgan says its plans to include Nigeria’s 2024 bond in its Government Bond Index-Emerging Markets (GBI-EM) to be issued on August 29, in addition to three other bonds already listed.

Traders said demand for the 2024 paper and other maturities has risen since Thursday when the news filtered into the market.

“Yields have gone down across the board because many investors, including offshore interest are taking position in the market,” one dealer said.

At 1443 GMT, the yield on the 2024 debt note was down 35 basis points to 11.93 percent compared with 12.28 percent it opened the market on Monday.

The yield on the 2034 paper also fell to 12.12 percent from 12.33 percent on Monday, while that on the 2022 paper dropped to 11.77 percent from 12.11 percent.

The yield on the 2017 paper fell to 11.08 percent from 11.36 percent.

“The market is expected to see further increase in demand for local debt, and yields will inch lower in the coming week,” another dealer said.

Businessday