Nigeria_Fixed Income Daily: Bond yields trend lower post auction
- Market commentary
§ The CBN held an OMO auction today, selling N152.6 billion (N50 billion on offer) on the 252-day bill at a stop rate of 18% (effective yield: 20.55%). Following this, Interbank Call rate advanced 33bps to 13.50%. At the FX interbank market, the spot and one year forward rates remained unchanged at N304.50 and N349.83 respectively.
§Following the liquidity mop up, trading in the T-bills market was largely mixed with yields advancing 6bps on average. Whilst yields on the 161DTM (+92bps) and 210DTM (+65bps) bills rose to 18.50% and 20.09%, yield on the 245DTM (-292bps) bill notably declined to 16.84%. Meanwhile, the bond market turned bullish with yields on benchmark bonds moderating 10bps on average. The changes were most pronounced on select auction bonds with yields on the 12.50% FGN JAN 2026 and 12.40% FGN MAR 2036 bonds declining 13bps and 12bps to close at 15.25% and 15.33% respectively (Auction levels: 15.4771% and 15.4880%).
§ Whilst we expect the tighter system liquidity to constrain demand across the fixed income market, we highlight the healthy appetite observed in the bond space today. Hence, we foresee a sustained demand at week close.
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