NAIROBI, Sept 4 (Reuters) - Yields on Nigerian Treasury bills are expected to stay flat next week, while yields on Kenyan bills are expected to edge up.
Nigeria’s bond yields are seen flat in the week ahead after the debt market broke through the resistance level of 16 percent this week on a persistent sell-off by mostly offshore investors and commercial lenders covering the naira’s position.
Nigerian local debt has been under pressure thanks to falling global oil prices, a slowing economic outlook in Africa’s biggest economy, and a weak naira.
“The market has been bearish all week as we finally crossed the 16 percent resistant level today (Friday),” one dealer said.
Dealers said the sell-off in the debt market reflected the global trend and development in the local equity market, which has falling to around six month low this week.
“The economic outlook remain hazy and many investors are moving their funds to other assets because of the uncertainty in the market,” another dealer said.
Last week, Nigeria released GDP data showing weak economic output growth and this have also triggered sell-offs by some offshore investors.
Nigeria’s economic growth slowed sharply in the second quarter with annual growth slipping to 2.35 percent from 6.54 percent a year earlier, the statistics bureau said last week.
Dealers said the market should remain quiet in the coming week having seen a bearish level for a while.
The benchmark 2024 paper climbed to 16.02 percent from 15.97 percent, while the 2022 debt was trading higher at 16.08 percent against 15.87 percent.
Yields on the longest tenor 2034 debt rose to 15.94 percent on Friday from 15.71 percent last week.
Yields on Kenyan Treasury bills are expected to rise, as banks prefer to keep their money in higher-yielding term auction deposit, or TADs, used by the central bank to mop up liquidity in the interbank market.
Subscription levels are expected to remain relatively low.
Yields of 91-day, 182-day fell at auction this week, while yields on the 364-day bills were up.
The yields at this week’s auction of bills were 11.502 percent for 91-day, 12.305 percent for 182-day and 13.967 percent for 364-day.
“I think the yields should continue edging up, while the subscription levels should remain relatively low,” said Mathangani Kariuki, a fixed income trader at Kestrel Capital.
The bank normally uses liquidity management, including repurchase agreements (repos) as a tool for stabilising the foreign exchange rate by making it slightly more expensive for traders to bet against the shilling.
Next week, the central bank will offer Treasury bills of all tenors worth a total of 11 billion shillings ($104.27 million). ($1 = 105.5000 Kenyan shillings) (Reporting by Oludare Mayowa; Editing by Edith Honan and Alison Williams)