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Nigeria_Fixed Income Daily: Bonds trade bullish amidst PMA

• Market commentary

§ At the T-bills Primary Market Auction, the CBN offered a total of N142 billion across the 91DTM, 182DTM and 364DTM bills. However, Interbank call rate declined 258bps to 14.17%. Meanwhile, the naira spot and forward rates remained unchanged at N305.50 and N349.00.

§The T-bills market traded mixed albeit with a slightly bearish bias as yields advanced a marginal 3bps on average. Notably, yields on the 57DTM (+70bps) and 127DTM (+31bps) bills rose to 14.38% and 17.80% respectively whilst yields on the 204DTM (-55bps) and the 267DTM (-46bps) recorded the largest moderations to close at 19.64% and 20.33%. Meanwhile, at the bond auction, the DMO sold N60 billion, N30 billion and N70 billion on the 5year, 10year and 20year bonds at respective stop rates of 16.550%, 16.612% and 16.770% - all coming in slightly lower than market rates save for the 5-year bond. In the secondary market, demand improved, with yields declining 9bps on the average across traded instruments. Notably, yields on the - 14.50% FGN JUL 2021, 12.50% FGN JAN-2026 bonds declined 9bps and 14bps respectively to close at 16.43% and 16.51%.

§ Whilst we expect positive sentiment to persist in the Bond market, we expect trading in the T-bills market to be shaped by the result of the auction which is yet to be released as at the time of writing.