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Nigeria_Fixed Income Daily: Markets turn mixed amidst bargain-hunting

• Market commentary

§ In line with the trend seen since the start of the week, the CBN held an OMO auction with N20 billion on offer on each of the 203-day and 364-day bills. The apex bank eventually sold N17.8 billion and N76.3 billion on the 203-day and 364-day bills at respective stop rates of 18.0% and 18.5% (effective yields: 20.00% and 22.69%). Despite this, Interbank Call rate moderated 167bps to 8.83% supported by liquidity from maturity. At the FX interbank market, the naira appreciated N1.78 against the dollar to settle at N305.00 at the spot market whilst the one year forward rate remained unchanged at N348.14.

§ Fixed income markets turned mixed today as investors cherry-picked across the curve. Yields in the T-bills market moderated 6bps on average with the largest declines seen at the short end of the space - the 49DTM (-157bps) and 98DTM (-155bps) bills retreating to 15.56% and 16.38% even as most long-dated bills recorded advances. Similarly, the bond market traded mixed amidst a slightly tepid trading session. Buying momentum was concentrated on short-dated bonds such as the 15.54% FGN FEB 2020 which shed 8bps to close at 14.91% with investor appetite fading further down the curve as the 12.50% FGN JAN 2026 bond advanced 4bps to 15.38%.

§ Even as market turned slightly upbeat today, we note that investor appetite remains muted across most of the space and we expect CBN’s liquidity mop up stance to somewhat curtail demand in tomorrow’s session.