FREE

Nigeria_Fixed Income Daily: Bulls take charge following PMA results

• Market commentary

§ At Wednesday’s T-bills Primary Market Auction, the CBN sold a total of ₦202 billion (offered: ₦142 billion) across the 91DTM, 182DTM and 365DTM bills at respective stop rates of 13.69%, 17.15% and 18.4495% (effective yields: 14.17%, 18.75% and 22.61%). However, supported by today’s maturity inflows (N399 billion), Interbank call rate dipped 467bps to 9.50%. Meanwhile, the naira spot and forward rates remained unchanged at N305.50 and N349.00 respectively.

§The T-bills market traded bullish as strong demand from yesterday’s auction filtered into today’s trading session amidst excess liquidity inflows from today’s maturity. Overall yields declined 12bps on average, with the most significant moderations recorded on the short end of the space. Notably, yields on the 84DTM (-112bps), 119DTM (-91bps) and 28DTM (-77bps) bills declined to 14.57%, 15.62% and 14.05% respectively. Expectedly, strong bullish sentiment persisted in the bond market with yields moderating 22bps on average. Particularly, yields on the auction bonds - 14.50% FGN JUL 2021, 12.50% FGN JAN-2026 and 12.40% FGN MAR 2036 bonds declined 33bps, 31bps and 36bps respectively to 16.10%, 16.20% and 16.42%.

§ We expect the bullish sentiment in both the T-bills and bonds space to persist at week close. However, we believe any mop up action by the apex bank at week close could cap further moderation in yields.