FREE

Nigeria_Fixed Income Daily: T-bills selloff persists ahead of PMA

Market commentary

• Amidst further moderation in system liquidity to about N107 billion, interbank placement rates climbed further with the Call rate up 67bps to 11.17%. At the FX interbank market, the Naira appreciated 10 kobo to NGN199.05/USD, retracing from an intraday high of NGN198.80/USD.

• The T-bills market maintained a bearish pattern in today’s session as investors sold off ahead of tomorrow’s T-bills PMA where rates are expected to close higher following the jump in April inflation rate. Consequently, yields advanced 30bps on average with the most notable yield rise recorded on the 23DTM (+76bps), 30DTM (+117bps), and 37DTM (+92bps) bills, closing at 5.79%, 6.42%, and 6.14% respectively. On the other hand, sentiment turned mixed in the bond market (with a bearish bias) as yields rose 10bps on average. Whilst yield on the 14.20% FGN MAR 2024 bond declined 15bps to 14.13%, the yield on the 15.10% FGN APR 2017 bond climbed 39bps to 12.50%.
• At tomorrow’s T-bills PMA, the CBN will be offering N110.9 billion across the 91DTM (N32.4 billion), 182DTM (N22.8 billion), and 364DTM (N55.7 billion) bills. Whilst we note the lower amount on offer compared to April (N150 billion), we expect rates to be pegged relatively higher than the previous auction on the back of the tighter system liquidity, higher inflation rate, and the speculation around a possible rate hike at next week’s MPC. That said, we expect a tepid trading session (with a mixed bias) in the fixed income market ahead of the release of the auction result.