Nigeria_Fixed Income Daily: Persistent mop up drives yields higher
- Market commentary
§ The CBN conducted another OMO auction in today’s session, offering N50 billion apiece on the 177DTM and 345DTM bills. Whilst no sale was made on the 177DTM bill, the apex bank eventually sold N14.2 billion on the 345DTM at a stop rate of 18.6% (effective yield: 22.57%). Despite this, Interbank Call rate moderated 17bps to close at 10.08%. At the FX interbank market, the naira held at N305.50 to the dollar at the spot market whilst the one year forward rate increased N29.00 to N378.00.
§ Trading persisted bearish in the T-bills market today amidst the OMO announcement with yields rising 23bps on average. Sell offs were concentrated on the mid-dated bills with yields on the 107DTM (+221bps), 114DTM (+115bps), and 205DTM (+72bps) bills climbing to 19.23%, 18.78%, and 20.33% respectively. Similarly, the bond market traded bearish with yields on benchmark bonds rising 2bps on average. The most notable yield advances were on the 16.39% FGN JAN 2022 and 12.1493% FGN JUN 2034 bonds which increased 3bps each to settle at 15.84% and 15.98% respectively.
§ With market sentiment remaining weak, we expect further bearish trading tomorrow even as the CBN is likely to revisit the market with another OMO auction.
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