FREE

Nigeria_Fixed Income Daily: Bills bullish, bonds bearish ahead of the Christmas holidays

• Market commentary

§ The CBN conducted another OMO auction in today’s session, offering N30 and N40 billion on the 135DTM and 356DTM bills respectively. Eventually, the apex bank sold N157 million and N29 billion on both bills at respective stop rates of 18.0% and 18.6% (effective yield: 19.3% and 22.7%). Following this, Interbank Call rate advanced significantly to 19% (Previous: 4%). At the FX interbank market, naira remained unchanged at N305.25 and N378.00 against the dollar for the spot rate and one year forward rate respectively.

§Trading pattern in the T-bills market remained bullish ahead of the Christmas holidays amidst broad based demand in the space. Yields moderated 21bps on average with the most significant declines recorded on the 90DTM (-174bps), 104DTM (-92bps), and 202DTM (-111bps) bills closing at 12.63%, 15.14%, and 18.07% respectively. Conversely, trading in the bond market turned downbeat at week close as yields across the benchmark bonds advanced 6bps on average. Particularly, yields on the 14.20% FGN MAR 2024 and 12.50% FGN JAN 2026 bonds rose 25bps and 8bps to settle at 15.69% and 16.13% respectively.

§ In the coming week, we expect the fixed income markets to continue to trade mixed amidst relatively tepid market activity ahead of the new year. Also, given the tepid sales from today’s auction, we anticipate another OMO auction from the CBN at week open.