Nigeria_Fixed Income Daily: Mixed sentiment prevails in T-bills market
Market commentary
Amidst modest improvement in system liquidity, up N189 billion to N283 billion, Interbank Call rate declined further at week open, down 217bps to 11.33%. On the FX Interbank market, the naira depreciated 58 kobo to close at NGN308.37/USD whilst trading at NGN351.60/USD at the 0ne year forward.
Mixed sentiment prevailed in the T-bills market as the modest improvement in system liquidity supported demand on some maturities whilst sell offs persisted on others. The 31DTM (-240bps) and 262DTM (+57bps) recorded the most notable changes in yields, closing at 15.71% and 22.53% respectively. The Debt Management Office released a provisional issuance calendar for Q4’16 showing a monthly average of N98 billion (Q3’16: N 117 billion). Notwithstanding the potential reduction in supply, the bond market maintained a bearish tone, with yields climbing 12bps across most traded maturities. Notably, the 15.54% FGN FEB 2020 and 12.50% FGN JUL 2026 recorded the most sizeable uptick in yields, up 20bps and 16bps to 14.80% and 15.08% respectively.
We expect mixed sentiment to persist in the T-bills market, albeit with bullish bias on the back of the improvement in system.
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