Nigeria_Fixed Income Daily: Rates settle higher at bond auction
- Market commentary
§ Interbank Call rate moderated a mild 33bps to 13.17% amidst relatively unchanged liquidity. At the FX Interbank Market, the naira appreciated 25 kobo to close at N304.50 whilst the one year forward rate appreciated N3.77 to N349.83.
§The DMO held its monthly bond auction today with N35 billion on offer on each of the 5-year, 10-year, and 20-year bonds. The DMO eventually sold N10 billion, N45 billion, and N40 billion of the 5-year, 10-year, and 20-year bonds at respective stop rates of 15.2990%, 15.4771%, and 15.4880% - higher than current market levels. Trading in the secondary market turned mixed before the results of the bond auction. Yields in the T-bills market declined 8bps on average with no discernable pattern across the space. Notably, whilst yield on the 190DTM (-85bps) bill fell to 17.80%, yield on the 50DTM (+148bps) bill rose to 16.29%. Similarly, the bond market traded mixed with sell pressure on the auction bonds countered by notable buying on other long-tenured bonds. In particular, whilst yield on the 12.40% FGN MAR 2036 bond advanced 3bps to 15.45%, yield on the 12.1493% FGN JUL 2034 bond moderated 4bps to 15.05%.
§ Although it is difficult to determine market sentiment given mixed trading, we expect an uptick in yields in the bond market as market adjusts towards auction levels.
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