FREE

Nigeria_Fixed Income Daily: Markets trade bearish at week close

Market commentary

On the back of sustained decline in system liquidity (down c.N54 billion to c.N167 billion), Interbank Call rate climbed 442bps to 9.42%. At the FX Interbank spot market, the Naira depreciated 37kobo to NGN282.33/USD whilst trading at one year forward closed at NGN317.82/USD.

​

At the T-bills PMA, the CBN sold N28 billion, N42 billion, and N120 billion across the 91DTM, 182DTM, and 364DTM pegged at stop rates of 9.98%, 12.24 and 14.99% (effective yields of 9.19%, 13.04% and 17.62%) respectively. On the back of the relatively higher auction yield levels amidst lower system liquidity, the T-bills market turned largely bearish with yields up 57bps on average across maturities. The most notable uptick in yields were observed on the 237DTM (+206bps), 328DTM (+125bps) and 352DTM (+203bps) closing at 12.09%, 12.42% and 13.88% respectively. Similarly, trading in the bond market remained bearish with yields up 20bps on average across maturities. The 15.10% FGN APR 2017, 15.54% FGN FEB 2020 and 16.39% FGN JAN 2022 recorded the most notable upticks, up 38bps, 25bps and 30bps to 12.63%, 14.11% and 14.08% respectively.

With the June Inflation figures due for release in the coming week (which is expected to inch moderately higher) amidst tight system liquidity, we expect bearish sentiment to persist in the coming sessions.