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Nigeria_Fixed Income Daily: T-bill yields maintain bullish momentum

• Market commentary

§ At the FX interbank market, the naira remained unchanged at N305.00 and N378.00 against the dollar for the spot rate and one year forward rate respectively. Meanwhile, Interbank Call rate advanced 167bps to 9.67%.

§At yesterday’s Primary Market Auction, the CBN sold N35 billion, N23 billion, and N135 billion (offered: N28 billion, N42 billion and N55 billion) across the 91DTM, 182DTM and 364DTM bills at respective stop rates of 14.00%, 17.50% and 18.69% (effective yield: 14.51%, 19.17% and 22.97%). Despite their respective effective yields coming above secondary market levels, yields continued to head southwards in the T-bills market amidst health demand across the space. Overall, yields declined 36bps on average with the most significant moderations observed on the short to mid-term maturities. Notably, yields on the 14DTM (-237bps), 84DTM (-238bps) and 140DTM (-197bps) declined to 11.16%, 11.00% and 15.93% respectively. However, the bond market maintained its bearish momentum as yields on the benchmark bonds advanced 10bps on average. Particularly, yields on the 16.00% FGN JUN-2019, 15.54% FGN FEB-2020 and 12.40% FGN MAR-2036 rose 18bps, 17bps and 8bps to close at 16.13%, 16.23% and 16.41% respectively.

§ Whilst we foresee another bearish trending in the bonds market at week close, we expect the T-bills space to extend its bullish run given the positive investor sentiment.