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Nigeria_Fixed Income Daily: T-bills market upbeat at week open

Market commentary

• Despite the relatively unchanged system liquidity, Interbank placement rates moderated marginally at week open as the Call rate declined 17bps to 3.50%. At the FX interbank market, the Naira remained unchanged at NGN199.05/USD.

• The T-bills market opened the week on an upbeat note as yields declined 18bps on average amidst broad-based demand in the space. The 72DTM(-76bps), 79DTM(-65bps), and 177DTM(-61bps) bills recorded the most notable yield declines to close at 5.83%, 6.89%, and 8.81%. Contrarily, the bond market maintained its bearish bias in today’s session amidst a sustained risk-off sentiment as yields advanced 7bps on average. Particularly, yields the 15.54 FGN FEB 2020 and 12.1493% FGN JUL 2034 bonds advanced 12bps and 16bps to 12.85% and 13.42% respectively.

• The CBN will be offering N150.6 billion across the 91DTM (N45.1 billion), 182DTM (N23.4 billion), and 364DTM (N82.0 billion) at tomorrow’s T-bills PMA. Given the lower quantity on offer compared to the previous auction volume of N167.5 billion, and amidst relatively higher liquidity, we expect rates to close marginally lower than previous auction level (particularly the shorter termed maturities). Whilst we expect cautious trading in the T-bills space ahead of the auction result, we expect sentiment in the bond market to remain tepid.