Nigeria_Fixed Income Daily: Liquidity buoys demand in the T-bill space
- Market commentary
§ Interbank Call rate dropped a further 409bps to 14.83% on the back of improved liquidity. At the FX interbank market, the naira remained unchanged against the dollar at N304.75 whilst the one year forward rate fell to N348.14 (prev:N355).
§ The CBN held a Primary Market Auction in yesterday’s session, selling N21 billion, N28 billion, and N32 billion on the 91-day, 182-day, and 364-day bills at stop rates of 14%, 17.09%, and 18.30% respectively (effective yields: 14.51%, 18.68%, and 22.39%). In today’s session, the T-bills market extended its bullish run as yields declined 28bps on average. With the 182-day bill settling at a lower rate than secondary market levels, buying was weighted around the mid end of the space with yields on the 105DTM (-168bps), 203DTM (-102bps), and 266DTM (-226bps) bills dropping to 17.53%, 18.08%, and 18.56% respectively. Meanwhile, the bond market traded nearly flat as large advances on the 16.39% FGN JAN 2022 bond (up 13bps to 14.88%) offset moderations on the 14.20% FGN MAR 2024 and 12.50% FGN JAN 2026 bonds which moved 3bps and 4bps to 15.01% and 15.29% respectively.
§ Improved system liquidity continues to spur buying, especially on bills, and we expect this to continue, barring CBN mop up during tomorrow’s session.
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