Nigeria_Fixed Income Daily: Trading turns bearish on tighter liquidity
- Market commentary
§ The CBN held an OMO auction today, selling N283 billion (N50 billion on offer) of the 363-day bill at a stop rate of 18.50% (effective yield: 22.67%). Following this, Interbank Call rate surged 788bps to 15.67%. At the FX Interbank market, the naira depreciated 4 kobo to close at N306.75 whilst the one year forward rate remained unchanged at N388.20.
§Fixed income markets closed the week bearish as tighter liquidity stifled demand. In the T-bills market, yields rose 12bps on average amidst sell offs on the 167DTM (+128bps) and 286DTM (+433bps) bills which settled at 18.98% and 20.44% respectively. Likewise, the bond market traded bearish with yields rising across the space. Notable advances were recorded on the yields of the 16.39% FGN JAN 2022 and 12.1493% FGN JUL 2034 bonds which rose 4bps and 5bps to 14.85% and 15.02% respectively.
§ Even as we expect tight liquidity to constrain demand at the start of next week, we note the room for further upward adjustment in T-bill yields following the results of today’s OMO auction.
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