Nigeria_Fixed Income Daily: Bond yields climb following tepid auction
- Market commentary
§ Interbank Call rate fell to 12.33% (prev: 25.17%) following OMO maturity today. At the FX interbank market, the CBN FX spot rate held at N305.50 against the dollar whilst the one year forward also remained unchanged at N355.
§ The T-bills market traded mixed once again, albeit with a bullish bias as buying on short to mid-dated bills drove average yields 8bps lower. Particularly, yields on the 14DTM (-112bps) and 154DTM (-116bps) bills declined to 15.28% and 18.57% respectively. In contrast, bearish sentiment intensified in the bond market with yields on benchmark bonds rising 22bps on average. Whilst there were notable advances on all bonds, yields on the bonds auctioned yesterday – 14.50% FGN JUL 2021, 12.50% FGN JAN 2026, and 12.40% FGN MAR 2036 – rose 24bps, 22bps, and 15bps to settle at 15.42%, 15.94%, and 15.91% – close to yesterday’s auction stop rates.
§ Demand for bonds remains muted, evidenced by rising yields and low subscription at yesterday’s auction, and we anticipate further bearish trading in this space. Meanwhile, liquidity from OMO maturity should support buying momentum on T-bills.
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