Nigerian bond yields have risen by around 10 basis points on average this week due to profit taking by both offshore and local pension funds following a fall in the price of oil, and concerns on the naira.
After the Central Bank of Nigeria retained its benchmark rate on Friday, yields were seen to drop. Traders said the bond market was attractive for buyers with the benchmark rate held at 12 per cent.
The local currency has dropped by around three per cent in the year to date according to report, declining to its lowest level in more than three months on Thursday due to demand pressure and dollar squeeze.
At the bond auction on Wednesday, yields rose marginally on the three-year to 11.49 per cent from 11.12 per cent at the previous auction. The 10 years tenor paper fetched 12.23 per cent, compared with 12.22 percent in August.
“The market was a seller market this week, mostly by offshore investors taking profit and playing safe because of the falling naira value,” a dealer said.
In the meantime, the yields on Kenyan treasury bills and a 10-year bond are expected to increase slightly. According to Reuters, the yields on Kenyan treasury bills and a 10-year bond are expected to rise slightly, with the bond expected to see strong interest because it offers a striking yield in a money market that is awash with cash.