Election to spur Nigerian yields, Kenyan bond in focus

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NAIROBI – Nigerian bonds yields could rise next week on a possible sell off by some offshore investors due to uncertainty around elections on March 28, while an infrastructure bond in Kenya may attract heavy bidding.


President Goodluck Jonathan faces an election on March 28 against main rival for the top job, military ruler and opposition alliance candidate , a contest analysts say is the closest since return democracy in 1999.

The uncertainty may cause investors to pare down bond holdings in the run-up to the closely fought poll, dealers said.

A possible down grade by S&P rating agency next week could also unnerve investors and spur profit-taking, dealers said, while the yields could also be affected by the outcome of a rate decision meeting by the central bank on Tuesday.

Yields fell across the board at a Treasury bills sale this week where central bank raised 167 billion naira ($839 ).

The 91-day note fetched 10.79 percent, broadly flat against 10.8 percent at the previous auction, while the 182-day paper sold for 14.7 percent, against 14.85 percent previously.

The 1-year note attracted 15.35 percent at the same auction, compared with 15.89 percent at the previous sale.

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“We expect any possible down grade by the rating agency S&P and the preparation for the election to trigger a sell-off next week and a subsequent increase in yields,” one dealer said.

Yields on the 2016 debt closed lower at 16.03 percent on Friday, compared with 16.15 percent last week, while the 2022 note rose to 16.99 percent against 16.03 percent previously.

The benchmark 2024 paper fell to 16.35 percent 16.63 percent last week.


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Investors in Kenyan debt focus on the sale of a 12-year infrastructure bond worth 25 billion shillings ($273 million), which is expected to draw interest due to its fairly high yield.

The central bank will auction the bond along with Treasury bills of all maturities, during two separate auctions next week, but fixed income traders anticipated the infrastructure bond to be auctioned on March 25 will be the main highlight.

“Next week there is a showstopper, the infrastructure bond. That will steal the show,” said John Njenga, a trader at Commercial Bank of Africa.

He said he expected the bond to be oversubscribed as it came with incentives, including exemption from withholding tax. (REUTERS)