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Nigeria_Fixed Income Daily: Yield directions varied at week open

Market commentary

• Whilst system liquidity remained relatively unchanged at week open (N240 billion), the interbank Call rate moderated further – down 92bps to 4.1%. At the FX interbank market, the Naira appreciated 22 kobo to NGN198.75/USD, after recording an intraday high of NGN198.63/USD.
• Amidst a calmly traded session, T-bills market opened the week mixed (albeit with a mild bearish bias) as yields inched 7bps higher on average. Whilst demand persisted across a few short dated maturities, selloff was evident across the other maturities. Particularly, the 87DTM (+71bps) and 101DTM (+39bps) bills recorded the most sizeable selloff, closing at 8.07% and 8.05% respectively. Similarly, the bond market opened quiet amidst a relatively cautious trading sentiment. Overall, yields declined 11bps on average across the traded maturities, supported by the strong demand recorded on the 15.54 FGN FEB 2020 bond as its yield moderated 137bpsto close at 11.27%.
• Whilst we expect sentiment to remain tepid on the long end of the T-bill space, we expect the anticipated liquidity from FAAC inflows to buoy modest demand on the short-mid dated maturities (barring any OMO auction). However, we expect the lull trading pattern in the bond market to persist amidst sustained cautious trading sentiment.