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Nigeria_Fixed Income Daily: Markets trade mixed at week close

Market commentary

•  Following a mild improvement in liquidity to c.N380 billion (Previous:N370 billion), interbank placement rates moderated marginally with the Call rate down 9bps to 4.08%. At the FX interbank market, the Naira closed unchanged at NGN199.05/USD, retracing from an intraday high of NGN197.50/USD.

• Trading in the T-bills market closed the week on an upbeat note as demand persisted across most maturities (supported by the healthy system liquidity) - yields moderated 17bps on average. The most notable yield declines were recorded on the 27DTM (-60bps), 34DTM (-68bps), and 48DTM (-77bps) bills, closing at 4.24%, 4.30%, and 4.48% respectively. The bears however remained largely dominant in the bond market at week close as broad selloff drove yields 12bps higher on average. The most sizeable sell pressure was witnessed on the 10.00% FGN JUL 2030 and 12.1493% FGN JUL 2034 bonds, with yields up 16bps and 23bps to 13.55% and 13.86% respectively.
• We expect trading sentiment to remain upbeat in the T-bills market as investors continue to find solace around the short end amidst possibilities of an upward shift in the yield curve. However, we believe the bond market will remain tepid at week open as traders act cautiously ahead of the monthly bond auction scheduled for Wednesday.