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Nigeria_Fixed Income Daily: Fixed income market open the year on diverging paths

• Market commentary

§ The CBN opened the year with an OMO auction today, offering N50 apiece on the 184DTM and 352DTM bills respectively. The apex bank eventually sold N21 and N30 billion on the 184DTM and 352DTM bills at respective stop rates of 18.0% and 18.6% (effective yield: 19.80% and 22.67%). Despite this, Interbank call rate declined marginally to 8.25% (prev: 8.83%). Meanwhile, at the FX interbank market, the naira remained unchanged at N305.00 and N378.00 against the dollar for the spot rate and one year forward rate respectively.

§The Fixed income market started off the year on a mixed note. Trading on the T-bills market was bullish in today’s session with yields declining 25bps on average. The most significant moderations were recorded on the short to mid-term of the space as yields on the 30DTM (-156bps), 107DTM (-149bps) and the 51DTM (-120bps) bills declined to 14.39%, 14.81% and 15.73%. Conversely, the bonds market traded bearish with sell offs recorded across the entire space as yields on the benchmark bond advancing 15bps on average. Notably yields on the 16.00% FGN JUN 2019, 14.20% FGN MAR 2024, 12.1493% FGN JUL 2034 climbed 90bps, 12bps and 38bps respectively to close at 19.75%, 15.69% and 15.61%.

§ The CBN will be conducting a Primary Market Auction tomorrow, offering N28, N42 and N55 billion each across the 91DTM, 182DTM and 364DTM against maturities on Thursday. That said, we expect the result of the PMA to drive trading in the tomorrow’s session.