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Nigeria_Fixed Income Daily: Bearish sentiment drives yields upwards
- The CBN sold
N87.7 billion of the 288DTM bill at an OMO auction in today’s session, pegged at a stop rate of 18% (effective yield: 20.97%). Following this, interbank Call rate inched higher, up 75 bps to 4.75%. At the FX Interbank spot market, the naira depreciatedN20.05 to close atN330.12.
- Reacting to the MPC decision to raise the policy rate, the T-bills market traded slightly bearish, with yields up 30bps on average. The most significant yield changes were recorded on the longer end of the space as yields on the 267DTM(+179bps), 281DTM(+50bps), and 323DTM(+134bps) bills rose to 19.04%, 20.35%, and 19.68% respectively. The bond market however traded largely mixed with yields up by an average 6bps. Whilst sell pressure was evident on the 9.35% FGN AUG 2017 bond with yield up 33bps to close at 19.57%, modest demand was observed on the 12.50% FGN JAN 2026 bond as its yield declined 14bps to 15.26%.
- Amidst weak market sentiment (following the rate hike), we expect the bearish trading pattern to persist in tomorrow’s session.
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