Nigeria short-dated debt notes seen drawing support

Bola Adesola

    NIGERIA
   Yields on Nigeria's bills are seen mixed at an auction next week as strong investor demand is expected only at the short end of the curve.
   Nigeria plans to issue about 168.28 billion naira ($1.03 billion) in Treasury Bills on Thursday.
   Traders said there has been mixed activity in the market this week because of initial profit-taking and later increased interest from offshore investors attracted to the shorter-dated paper.
   "We expect strong demand at the auction and yields falling marginally on the short-end of the curve, while the long tenor is seen flat depending on the level of interest," one dealer said.
   Yields were also mixed at the bond auction this week, with the three-year paper sold at a higher yield, while that on the 10-year paper fell compared to their previous auctions.

   KENYA
   Dealers expect yields on Kenya's Treasury bills to be flat next week when the central bank auctions 12 billion shillings' ($136.60 million) worth of paper.
   At this week's sale, the weighted average yield on the 91-day paper dipped to 9.275 percent from 9.283 percent last week, while the yield on 182-day bills rose to 10.323 percent from 10.016 percent. That on the 364-day paper climbed to 10.239 percent from 10.086 percent.
   Next week the central bank plans to issue a new 5-year bond, and reopen an existing 20-year bond to raise up to 30 billion shillings.
   The central bank last month ramped up its weekly borrowing on 91-, 182-, and 364-day Treasury bills from 9 billion shillings to 12 billion after the government revised its domestic borrowing requirement.
   Mathangani Kariuki, debt analyst at African Alliance, said the central bank's greater funding requirement is expected to offset excess liquidity in the market, which has been putting downward pressure on yields.
   The overnight interbank lending rate fell to 3.4804 percent on Thursday from 6.8778 percent a week earlier.
   "The central bank needs to pick up most of what comes through so I think that will prop up the rate," Kariuki said.