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Nigeria_Fixed Income: Buying strengthens in bond market at week close
Market commentary
- Amidst a modest improvement in system liquidity to c.142 billion, Interbank Call rate declined 279bps to 8.92%. At the FX interbank market, the Naira remained unchanged at NGN199.05/USD, after recording an intraday high of NGN198.05/USD.
- At week close, yield directions remained varied in the T-bills market amidst a tepid market sentiment. Overall, yields declined 3bps on average across all maturities with the most sizeable changes recorded on the 13DTM (-73bps) and 335DTM (+27bps) bills, closing at 5.15% and 13.56% respectively. On the other hand, buying momentum strengthened in the bond market as sustained demand across all traded maturities in the space steered yields 18bps lower on average. Particularly, yields on the 14.20% FGN MAR 2024 and 12.50% FGN JAN 2026 bonds declined 38bps and 39bps to 14.20% and 13.80% respectively.
- The National Bureau of Statistics (NBS) released the latest GDP report showing that the Nigerian economy contracted by 0.36% y/y in Q1’16 (in line with Vetiva estimate: -0.41% but worse than Consensus: 1.8%). Whilst we anticipate a cautious trading pattern in the fixed income market as market participants await the MPC decision, we foresee a bearish bias as the worse than expected GDP figure weighs on market sentiment.
Provider
Vetiva Capital Management
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