Nigeria_Fixed Income Daily: Bearish sentiment persists at week open
§ In line with recent trend, the CBN continued its liquidity mop up stance, offering N50 billion each on the 185DTM and 353DTM bills in today’s trading session. Eventually, the apex bank sold N97.44 billion and N72.9 billion on the 353DTM and 185DTM bills at 18.5% (Effective yield: 22.53%) and 18.0% (Effective yield: 19.81%) respectively. Following the mop up, interbank call rate climbed 433bps to close at 8.58%. At the FX interbank market, the naira appreciated N4.79 to close at N316.37.
§ The T-bills market traded bearish as yields rose 51bps on average across the space. The change in yield were most notable on the 17DTM (+225bps), 31DTM (+162bps), and 339DTM (+206bps) bills closing at 15.03%, 16.89%, and 22.73% respectively. The bond market however traded mixed with a bearish bias. Whilst we observed modest demand on mid-long dated maturities, yields rose by 25bps on average across the space - driven by significant sell pressure on short dated maturities. The yields on the 15.10% APR FGN 2017, 9.85% FGN AUG 2017, and 9.35% FGN AUG 2017 bonds rose 114bps, 179bps and 175bps to close at 20.53%, 21.28%, and 21.07% respectively.
§ Given the apex bank’s persistent liquidity mop up stance (amidst the already tight system liquidity), we expect bearish trading sentiment to persist in the days ahead.
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