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Nigeria_Fixed Income Daily: Liquidity sustains bullish momentum

§Amidst buoyant system liquidity from yesterday’s bond maturity, Interbank Call rate moderated 196bps to 6.25%. At the FX interbank market, the naira depreciated N0.49 to close at N314.14.

§At the Primary Market Auction held during today’s session, the CBN sold N32.4 billion and N30 billion of the 91DTM and 182DTM bills at stop rates of 14.99% (effective yield: 15.57%) and 17.48% (effective yield: 19.15%) respectively. In addition, the DMO conducted its August bond auction today, selling the entire N110 billion tranche on offer across 5-year, 10-year, and 20-year bonds at marginal rates of 15.08%, 15.2848%, and 15.53% respectively. Trading in fixed income markets was largely bullish due to improved liquidity levels. In the T-bills market yields declined 30bps on average amidst notable buying interest around the mid-dated bills. Particularly, yields on the 106DTM (-136bps), 113DTM (-199bps), and 183DTM (-138bps) bills moderated to 17.34%, 15.72%, and 18.02% respectively. Similarly, the bond market traded bullish with modest demand across the entire space. Notable changes were seen on the 16.00% FGN JUN 2019 and 12.50% FGN JAN 2026 bonds as their yields moderated 46bps and 17bps to close at 14.68% and 15.26% respectively.

§Whilst we note that yields in today’s auctions closed just around the secondary market levels, we expect the improved system liquidity to continue to support demand in tomorrow’s session.