Nigeria_Fixed Income Daily: Liquidity mop up resumes, yields go higher
- Market commentary
§ The CBN conducted an OMO auction today, selling N4 billion and N47 billion on the 198-day and 345-day bills at respective stop rates of 18.0% and 18.5% (effective yields: 19.95% and 22.42%). Despite this, Interbank Call rate moderated slightly to 14.50% (prev: 15.50%). At the FX interbank market, the naira appreciated N4.06 against the dollar to close at N304.75 at the spot market whilst the one year forward rate remained unchanged at N348.14.
§ Trading in the T-bills market remained mixed (albeit with a slightly bullish bias) as yields moderated 4bps on average. Notably, the yield declines observed on the 37DTM (-87bps) and 93DTM (-134bps) bills which rose to 17.40% and 15.61% respectively, outweighed advances on the 254DTM (+71bps) and 261DTM (+55bps) bills which closed at 21.27% and 21.25% respectively. In contrast, the bond market traded bearish although yields on benchmark bonds rose a mild 3bps on average. Nonetheless, there was a relatively larger swing on the 15.54% FGN FEB 2020 bond which advanced 9bps to settle at 15.06%.
§ Considering trading has been tepid so far this week (particularly in the bond space) amidst CBN’s liquidity mop up stance, we expect very cautious trading session ahead of the result of the monthly Primary Market Auction scheduled for tomorrow.
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