Nigeria_Fixed Income Daily: T-bill yields decline despite OMO mop-up
- Market commentary
§ The CBN conducted another OMO auction today, offering N30 billion apiece on the 252DTM and 336DTM bills. Eventually, the apex bank sold N277 million and N217 billion on the 252DTM and 336DTM bills at respective stop rates of 18.00% and 18.60% (effective yields: 20.55% and 22.44%). However, Interbank Call rate was little changed at 6.60% (prev: 6.50%). Meanwhile, at the FX interbank market, the naira spot rate remained stable at N305.50 whilst the one year forward rate appreciated N29.00 to close at N348.00.
§Despite the liquidity mop-up, trading in the T-bills market turned bullish supported by modest demand across the space as yields moderated 22bps on average. Notably, yields on the 7DTM (-81bps), 56DTM (-122bps) and 105DTM (-206bps) bills declined to 14.03%, 11.46% and 15.19% respectively. Meanwhile, the bond market turned slightly bearish as yields advanced 6bps on average across the benchmark bonds. Particularly, yields on the 15.54% FGN FEB 2020 and 14.20% FGN MAR 2024 bonds advanced 8bps and 22bps respectively, closing at 16.42% and 16.15%.
§ Following today’s significant liquidity mop-up, we foresee possible tepid trading at week close – particularly at the short end of the yield curve.
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