IN BRIEF

• GHANA
  Fixed Income: The Ghanaian Treasury enjoyed robust demand for its weekly Treasury bill offers in February 2025 and expectedly capitalized on this favourable market condition to slash yields across the curve while exceeding its allotment target. Yields declined sharply by an average of 361bps with the help of the Treasury’s aggressive yield compression strategy amidst the robust investor appetite. We reiterate a “BUY” for the 364-day tenor to lock-in attractive carry. In the bond secondary market, our newly created IC Government Bond Index (IC_GBI) gained 8.8% m/m to settle at 78.0pts, corresponding to a weighted yield to maturity of 24.65% (-256bps m/m). This emphasizes the downward shift and a bull steepening of Ghana’s domestic yield curve. Against this backdrop, we recommend more duration risk to capitalize on price appreciation opportunities. Specifically, our estimated Modified Duration suggests a “STRONG BUY” for the 2033 and 2034 tenors which has the potential to return about 4.0% price gain for every 1.0% decline in yield.
  

  
  Currency:

• The Ghanaian Cedi enjoyed better support from the Bank of Ghana in Feb-2025, capping the depreciation against the US Dollar at 1.0% m/m (-5.2% YTD). We estimate the BOG’s periodic sale of 7-day FX Forward at USD 375.9mn in Feb-2025 (vs USD 555.0mn in Jan-2025), anchoring the USDGHS at 15.5/USD and easing the depreciation pressure. In the months ahead, we expect the Cedi’s pace of depreciation to be influenced by the new administration’s plan to implement key reforms in the FX market and reserves accumulation which will likely sustain the Cedi’s relative stability.

• KENYA
  Fixed Income: Investor demand for Kenyan Treasury bills strengthened in February 2025, supported by increased preference for the 182-day and the 364-day tenors. Consequently, treasury yields declined sharply across the curve amidst the Central Bank’s significant rate cut at the February 2025 MPC meeting. While the liability management operations in February 2025 eases the immediate external debt service pressure, we equally anticipate lower domestic issuances in the months ahead to sustain the decline in domestic yields.

  Currency:
  The Kenyan Shilling was stable in the first two weeks of February 2025 amidst thin trading volume, which coincided with build-up of forex reserves over the same period. Although depreciation pressure emerged in the second half of the month, the issuance of external debts (USD 1.5bn Eurobond and USD 1.5bn UAE loans) eased market concerns as the KES clawed back its losses. In the month ahead, we expect the inflows from the USD 1.5bn UAE loan and reprofiling of the 2027 Eurobond into a 2036 maturity to support KES stability.

 

 

• NIGERIA
  Fixed Income: The Nigerian T-bill primary market saw a significant increase in investor appetite across all tenors in February 2025, although the Treasury executed only two auctions, similar to the previous month. As a result, investor demand outweighed the Treasury’s target, leading to a notable downshift in the yield curve. Yields declined significantly across the T-bill curve amidst robust investor demand and expectation of lower inflation under the new rebased CPI series.
  
  
  Currency:

  The Naira enjoyed continued support in February 2025 as the Central Bank extended the deadline for FX sale to Bureau De Change (BDC) operators from end-January 2025 to end-May 2025. The CBN’s sustained FX sale to the retail and interbank markets helped to boost FX liquidity, supporting a 2.6% m/m appreciation of the Naira against the US Dollar (+3.0% YTD). We expect the Naira to remain stable in the near-term as the monetary policy committee approved the CBN’s continued FX sales which has boosted FX liquidity.