IN BRIEF

• GHANA
  Fixed Income:The Ghanaian Treasury comfortably exceeded both its target (+29.3%) and refinancing obligation (+45.2%) in February 2024 as money market conditions remained supportive with strong investor appetite and softening yield quotes. Yields fell sharply in February 2024 as the strong money market liquidity outweighed any upside risk from the unexpected uptick in the January 2024 inflation. We observed the tenor premium between the 91-day and the 182-day at 247bps, with that between the 182-day and 364-day bills at 55bps. This suggests the 182-day as more attractive, albeit with reinvestment risk than the 364-day bill.
  
  Currency: The Ghanaian Cedi continued its streak of losses in February 2024, depreciating by 2.5% m/m (-5.4% YTD) amidst the heavy GHS liquidity, tight FX supply, elevated corporate demand, and restrained FX sale by the BOG. At this pace, the spot USDGHS has overshot our end-1Q2024 forecast by 2.0pp with the risk of overshooting our FY2024 forecast depreciation of 8.4% if there is no retracement in the months ahead.
  
  
• KENYA
  Fixed Income:  It was a busy month for the Kenyan Treasury in February 2024 across the domestic and international debt markets as the authorities combined liability management with new borrowings to effectively ease investor concerns about near-term default risk. Domestic yields continued their northward trek at a slower pace, signalling limited room for further increases as the peak appears in sight.  While public finances remain stretched, we view the significant easing of external debt default risk and moderated FX pressures as a cap on the upside risk to domestic yields.
  
  Currency: The Kenyan Shilling rebounded strongly in February 2024 as the authorities made a surprise return to the Eurobond market to successfully raise USD 1.5bn which was used to fund a USD 1.4bn buyback of the KENINT-24 bond. This liability management strategy significantly reduced the risk of depletion in FX reserves while offshore participation in the IFB offer strengthened the Central Bank’s FX support. Consequently, we revise our outlook on the KES to a more positive tone, albeit cautious about new KES exposure at the current levels with the forward curve suggesting ≃158.0/USD by FY2024 (spot: 146.1/USD).
• NIGERIA
  Fixed Income: The Treasury’s borrowing requirement heightened in February 2024 as gross issuance target increased by 338.8% m/m while accepted bids exceeded the target by 104.6%. We believe the outsized target and uptake reflects the authorities’ strategy to drain interbank Naira liquidity in a quest to restore price and exchange rate stability. In line with our longstanding expectation for yields amidst the elevated inflation risk, stop rates surged across the T-bill curve, signalling the policy tilt in favour of higher interest rates.
  
  Currency: The Naira remains trapped in a twilight zone despite recent spate of devaluation and mostly FX supply-side reforms aimed at reviving FX inflows. The local currency lost 8.7% m/m (-43.1% YTD) against the USD in February 2024 and closed the month at 1,595/USD in the official market. We view the latest hike in the policy rate and other liquidity tightening measures as positive for restraining the FX demand on the market while the CBN sustains efforts to boost FX supply and foreign capital inflows.