Nigerian bonds yields seen up on liquidity boost

Nigerian bond yields could fall due to rising debt demand from pensions after the government distributes oil revenue.
Nigeria, Africa's top crude exporter, distributes revenue from oil among its three tiers of government every month, injecting liquidity into the money markets, which is expected to increase demand for debt and put a downward pressure on yields.
"We hope to see increased liquidity in the market next week from budgetary allocations to government agencies spurring buying by mostly pension fund administrators," one dealer said.
The local debt market is largely dominated by the pension funds in the absence of offshore investors that have largely stayed away since the central bank imposed tight controls in the foreign exchange market in February to support the naira.
Nigeria sold 80.20 billion naira ($403 million) worth of Treasury bonds this week with maturities ranging between five and 20 years at mixed yields. Traders had expected higher yields at the auction, but were disappointed with the outcome which reflected the yields at the secondary market.
"Many investors had expected to luck in at higher yields at the auction but were disappointed with the outcome will try to cover their positions next week, leading to downward movement in yields," another trader said.
Yields on the longest tenor 2034 debt rose by 10 percentage points to 15.22 percent from 15.12 percent last week.
The benchmark 2024 paper fell to 15.14 percent on Friday against 15.31 percent, while the 2022 debt was trading higher at 15.22 percent against 15.37 percent.