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Nigeria_Fixed Income Daily: Week opens on bullish note

Market commentary

• The CBN announced two OMO auctions today, offering N40 billion and N50 billion on the 262DTM and 353DTM bills respectively. Eventually, the apex bank sold N26 billion and N81 billion clearing at stop rates of 18.00% (effective yield: 20.67%) and 18.50% (effective yield: 22.53%%) respectively. Consequently, interbank Call rate rose 709bps to 22.42%. At the FX interbank market, the naira appreciated 57kobo at week open to close at N314.20.

• The fixed income market opened the week on a bullish note amidst increased market activity. With sizeable demand weighted on the shorter end of the T-bills space, yields moderated 25bps on average with the most significant declines recorded on the 31DTM (-230bps), 59DTM (-230bps), and 122DTM (-222bps) bills, closing at 14.40%, 14.24%, and 15.92% respectively. Similarly, yields trended lower for the third consecutive session in the bond market, down 14bps on average. Particularly, yields on the 16.00% FGN JUN 2019 and 12.1493% FGN JUL 2034 bonds declined 31bps and 24bps to close at 14.62% and 14.88% respectively.

• Whilst we expect cherry picking to persist in the coming sessions, we are of the opinion that buying bias will outweigh sell pressure as market sentiment remains broadly upbeat.