Nigeria_Fixed Income Daily: Markets swing bearish at week close
§In an attempt to mop up liquidity, the CBN offered N50 billion each on the 188DTM and 285DTM bills. Eventually, the apex bank sold N256.4 billion on the 188DTM bill, pegged at a stop rate of 18% (effective yield: 19.8%). Following the mop up, Interbank Call rate rose significantly to 24.9% (Previous: 9.25%). At the FX interbank market, the naira depreciated N17.32 to a record close of N332.07.
§Following the OMO announcement, sentiment turned bearish in fixed income markets as yields raced north. The bears dominated the T-bills market with yields up 80bps on average. The most significant activities were observed on the mid-dated maturities as yields on the 188DTM (+315bps), 216DTM (+298bps), and 223DTM (+197bps) bills closed at 19.60%, 20.24%, and 20.31% respectively. Similarly, the bond market traded bearish with yields rising 29bps on average amidst notable sell pressure on shorter-dated maturities. Particularly, yields on the 15.54% FGN FEB 2020 and 14.50% FGN JUL 2021 bonds rose 28bps and 16bps to close at 14.95% and 14.85%.
§Given the tight system liquidity and weak investor sentiment, we anticipate a tepid trading session at week open.
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