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Nigeria_Fixed Income Daily: T-bills market remains mixed ahead of PMA

Market commentary

• The CBN announced an OMO auction offering N50 billion on the 212DTM bill, however no sale was eventually made. With system liquidity up to N463 billion - following FAAC inflows, interbank placement rates moderated marginally with the Call rate down 210bps to 3.40%. At the FX interbank market, the Naira appreciated marginally (3 kobo) to close at NGN199.05/USD.

• Trading in the T-bills market remained mixed at week open as the improved system liquidity buoyed demand on the short-mid dated maturities, whilst tepid sentiment persisted across the longer maturities. Whilst yield on the 30DTM bill declined 27bps to 6.58%, yield on the 184DTM bill advanced 30bps to 9.76%. The bond market however opened the week on a bearish note amidst cautious trading across most maturities in the space. Particularly, yields on the 15.10% FGN APR 2017 and 14.20% FGN MAR 2024 bonds advanced 15bps and 16bps to 11.15% and 13.73% respectively.

• At tomorrow’s T-bills primary market auction (PMA), the CBN will be offering N143.85 billion across the 91DTM (N45.85 billion), 182DTM (N18.00 billion), and 364DTM (N80.00 billion) bills. Whilst we note the higher amount on offer compared to the last auction (N110.94 billion), we expect rates at the auction to close below previous levels supported by the robust system liquidity. That said, we expect trading in the fixed income market to remain broadly mixed in tomorrow’s session as traders tread cautiously.