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Nigeria_Fixed Income: Bearish sentiment trails market

Market commentary

• The CBN announced an OMO auction in today’s session offering N50 billion on the 206DTM bill. Eventually, N93 billion worth was sold at a stop rate of 10%. Interbank placement rates trended higher following a mild moderation in system liquidity to about N386 billion with the Call rate up 41bps to 3.58%. At the FX interbank market, the Naira depreciated 8 kobo to close at NGN199.05/USD.

• Trading in the T-bills market opened the week with a slightly bearish bias as announcement of the OMO auction amidst a downbeat market sentiment capped potential buying activities in the space. Overall, yields advanced 4bps on average with the most notable selloff recorded on the 94DTM (+40bps), 178DTM (+46bps), and 192DTM (+27bps) bills, closing at 7.45%, 9.59%, and 9.73% respectively. In the same vein, the bond market maintained a bearish trading pattern at week open as sizeable sell pressure drove yields 20bps higher on average. Particularly, yields on the 12.50% FGN JAN 2026 and 12.40% FGN MAR 2036 bonds advanced 43bps and 37bps to 13.72% and 13.88% respectively.

• Barring another OMO auction in tomorrow’s session, we expect trading sentiment to turn mixed in the T-bills market as market participants continue to play around the short end of the space whilst demand on the longer end stays tepid. Also, we expect the cautious trading sentiment to persist in the bond space for most part of the week as investors await the June bond offer circular.