Nigeria's bonds to attract lower yields at next week's auction

Nigerian bonds are seen attracting lower yields at an auction next week amid a liquidity boost in the money market arising from fresh injection of cash by the central bank.
Nigeria plans to issue 80 billion Nigerian naira ($402.01 million) worth of local currency-denominated bonds with a maturity range of between 5-years and 10-years on Oct 14.
Dealers said yields on local bonds have dropped this week since the central bank injected fresh cash into the banking system from retired Treasury bills, refunds from cash reserve requirements (CRR) and foreign exchange intervention funds.
"The market is very liquid with the injection of cash by the central bank, bringing up the banking system cash balance with the central bank to around 1.2 trillion naira on Friday," one dealer said.
Dealers said the bulk of liquidity in the market is being invested in fixed income assets by commercial lenders and pension funds, causing yields to drop further.
"Bonds are expected to close lower (at next week's auction), in line with their current levels in the secondary market." Citibank local unit said in a research note.
Yields on the benchmark 2024 paper fell sharply to 13.79 percent on Friday from 15.12 percent last week, while the longest-dated paper also fell to 14.74 percent against 15.04 percent.