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Nigeria_Fixed Income Daily: Markets trade mixed amidst tight liquidity

​§The CBN held an OMO auction today offering N50 billion each on the 245DTM and 364DTM bills. The apex bank eventually sold N60 billion and N141 billion on the 245DTM and 364DTM bills at respective stop rates of 18% and 18.50% (effective yields of 20.47% and 22.69% respectively). Following the mop up, Interbank Call rate advanced 650bps to 16.83%. At the FX interbank market, the naira depreciated N2.99 kobo to close at N313.07.

§The CBN held a Primary Market Auction in yesterday’s session, offering N230 billion across 91-day, 182-day, and 364-day bills. Amidst 74% over-subscription, the CBN eventually sold N28 billion, N24 billion, and N89 billion of the 91-day, 182-day, and 364-day bills at stop rates of 14.00%, 17.27%, and 18.30% respectively (effective yields of 14.51%, 18.90%, and 22.39% respectively). On the back of the liquidity outflow, the T-bills market traded relatively bearish as yields advanced 14bps on average. Bearish sentiment was most pronounced on the short end of the curve as yields on the 35DTM (+109bps), 98DTM (+110bps), and 119DTM (+212bps) bills settled at 17.37%, 15.98%, and 18.25% respectively. Meanwhile persistent buying momentum drove down yields on the benchmark bonds by 4bps on average. This was most evident on the short-to-mid end of the space as yields on the 15.54% FGN FEB 2020 and 14.20% FGN MAR 2024 bonds moderated 13bps and 7bps to close at 14.35% and 14.65%.

§ Despite sustained demand in the bond space, we expect recent liquidity mop up to constrain overall buying momentum at week close