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Nigeria_Fixed Income Daily: Bearish sentiment lingers

• The CBN announced an OMO auction in today’s session, offering the 364DTM bill. The apex bank eventually sold N65.03 billion, pegged at a stop rate of 18.5% (effective yield: 22.67%). The CBN later held another special auction on a two way quote basis to banks on the 364DTM bill with standard lot sizes of 1 billion, 2 billion and 5 billion. Despite the mop up, the Interbank Call rate declined 33bps to 4.42%. At the FX Interbank spot market, the naira appreciated N7.27 to close at N322.85.

• Still responding to the CBN rate hike, the fixed income market extended its bearish run today. The T-bills market traded bearish, with yields up 29bps on average amidst notable sell pressure on the mid dated maturities which saw yields on the 140DTM (+155bps) and 175DTM (+138bps) bills rise to 17.51% and 18.56% respectively. Similarly, trading in the bond market remained tepid with yields up 33bps on average. The most significant changes were on yields of the 16% FGN JUN 2019, 14.20% FGN MAR 2024, and 12.14% FGN JUL 2034 bonds as they rose 24bps, 25bps, and 31bps to close at 15.52%, 15.54%, and 15.76% respectively.

• We anticipate another bearish trading session tomorrow as the persistent OMO auctions indicates CBN’s intention to keep rates high.