AFRICA DEBT-High liquidity seen pushing Kenyan bond yields lower

KENYA
   High liquidity in the money market should see yields keep falling at the short end of the Kenyan debt curve for another week before investors pause ahead of end-month inflation data.
   The Central Bank of Kenya is scheduled to sell 9 billion  shillings ($102.74 million) of 91-day, 182-day  and 364-day  Treasury bills next week.
   The weighted average yield on the three-month paper fell to 9.2 percent this week from 9.9 percent a week earlier, edging towards the benchmark Central Bank Rate ,, which was left unchanged this month at 8.5 percent.

Bond issuance process

   "I think we've got one more week before it stops making sense dropping that rate lower," said Alex Muiruri, fixed income trader at African Alliance Investment Bank.
   High liquidity in the market meant this week's primary sales were heavily oversubscribed as commercial lenders looked to short-dated paper to park their money, pushing the yields lower.
   
   NIGERIA
   Weak appetite for Nigerian debt has kept yields stable this week and the situation may not change soon, with some investors switching into shorter-dated Treasury bills in search of better returns.
   Nigeria sold 57.73 billion naira ($354.39 million) of bonds with maturities of three and 20 years this week, less than the 70 billion naira it had initially offered and at higher yields than the previous auction.
   The country's bonds have become less attractive for local and offshore investors as the naira currency falls in value.
   "Appetite for bonds has been very weak with both local fund managers and offshore investors staying on the sideline watching developments in the foreign exchange market, which has been very volatile in the past three weeks," one trader said.
   The naira has come under pressure versus the dollar as offshore investors sell down equity positions and as importers  bring forward dollar purchases to hedge against further depreciation in the Nigerian currency.