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Nigeria_Fixed Income Daily: Sell offs ease despite tighter liquidity

Market commentary

Despite sustained tighter system liquidity, Interbank Call rate moderated to 34.4% having previously raced to 68.5%. At the FX Interbank market, the Naira depreciated NGN1.50 to NGN284.00/USD. At yesterday’s PMA, the CBN sold N18.12 billion, N11.33 billion and N50 billion across the 91DTM, 182DTM and 364DTM which cleared at 9.9948%, 12.30% and 14.999% (effective yields of 10.25%, 13.10% and 17.64%) respectively. Notwithstanding, the relative higher yield levels at the PMA and tighter system liquidity, trading in the T-bills market was largely mixed as demand surfaced on a select maturities across the yield curve whilst sell offs persisted on others. Overall, yields inched up a marginal 5bps on average across maturities with the 224DTM(-253bps) recording the largest decline whilst the 273DTM(11bps) recording the largest uptick to close at 12.32% and 14.09% respectively. Similarly, the bond market traded sideways with yields climbing a marginal 1bp on average. Notably, yield on the 16.39% FGN JAN 2022 rose 26bps to 14.58% whilst yield on the 12.50% FGN JAN 2026 declined 11bps to 14.73%. We anticipate a largely bearish sentiment in tomorrow’s trading session as the tight system liquidity continues to spur selloffs.