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Yields seen falling on Kenyan, Nigerian bonds

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Increased appetite for Nigerian debt by offshore investors and excess liquidity in the banking system are likely to push down yields across the board at auction next week.
Yields fell this week, when the bond sale drew offers for more than five times the amount sold. Nigeria sold 157.17 billion naira ($976.51 million) in bills with maturities ranging between 3 months and one year.
Traders said heavy demand from both local pension funds and some foreign portfolio investors were also driving yields lower.
Nigeria plans to raise 70 billion naira from 3-year and 10-year bonds on Wednesday. Expectations are that yields will fall in tandem with the prevailing trend at the secondary market.
“We expect the marginal rate at the auction to close lower than it did at the last auction, mirroring the levels in the secondary market where yields have dropped across the curve following a surge in demand for bonds,” local unit of Citibank wrote in its newsletter to clients on Friday.
KENYA
High levels of shilling liquidity in the money market will mean strong demand in next week’s Treasury bill auctions, sending yields lower still on the benchmark three-month paper.
The central bank will auction 91-day, 182-day and 364-day treasury bills worth a total 9 billion shillings.
“There is excess liquidity. That’s a signal that interest rates are coming down. So most likely they will continue dipping,” Robert Gatobu, trader at Bank of Africa, said.
At this week’s sale, the yield on the 91-day bill eased to 8.756 percent from 8.799 percent last week. That on the 182-day paper rose to 9.872 percent from 9.774 percent, the central bank said.
The yield on 364-day bills slipped to 10.083 percent, compared with 10.112 percent a week earlier.

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