Nigeria_Fixed Income Daily: Bearish bias lingers at week close
§ At an OMO auction held during today’s session, the CBN sold N62.9 billion (N50 billion on offer) of the 279DTM bill at a stop rate of 18% (effective yield 20.9%). Despite the mop up, interbank call rate declined further, down 17bps to close at 4.25%. At the FX interbank market, the naira appreciated N1.69 to reach a record week close of N321.16.
§ At week close, trading in fixed income markets turned mixed with yields varied across maturities. The T-bills market traded upbeat as yields declined 14bps on average. The most notable yield declines were on the 34DTM (-239bps), 55DTM(-96bps), and 307DTM (-133bps) bills as they closed the week at 15.27%, 12.69%, and 21.38% respectively. The bond market however traded mixed with yields marginally down 8bps on average. Whilst yields on the 10% FGN JUL 2030 and 12.15% FGN JUL 2034 bonds declined 18bps and 42bps to close at 15.36% and 15.34% respectively, sell pressure was evident on the short end of the bond space as yields on the 9.85% FGN JUL 2017 and 9.35% FGN AUG 2017 bonds rose 91bps and 89bps on average to close at 19.49% and 19.32% respectively.
§ We expect the mixed sentiment (with a bearish bias) to linger amidst quiet trading sessions in the coming week as market participants continue to trade cautiously.
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