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Nigeria_Fixed Income Daily: Yields climb higher at auctions

§Amidst relatively tight system liquidity, Interbank Call rate climbed 800bps to 23.83%. At the FX interbank market, the naira appreciated N4.31 to N306.33, the lowest close since July.

§The CBN conducted a Primary Market Auction today, offering and eventually selling N48.1 billion, N48.5 billion, and N86.7 billion of the 91DTM, 182DTM, and 364DTM bills at stop rates of 14%, 17.77%, and 18.48% respectively. With respective effective yields of 14.51%, 19.50%, and 22.66%, the bills settled marginally above corresponding secondary market levels. In addition, the DMO offered N120 billion across the 5-year, 10-year and 20-year bonds at the monthly bond auction. Ultimately, the DMO sold N15 billion, N30 billion, and N60 billion on the 5-year, 10-year, and 20-year bonds with low subscription levels driving marginal rates to 15.1430%, 15.5357%, and 15.5974% respectively.

§ Activity in the secondary market was mixed in the T-bills space with yields 11bps higher on average. Sell pressure was most evident on the short-dated maturities as yields on the 22DTM (+123bps) and 36DTM (+123bps) bills settled higher at 16.93% and 16.80% respectively. Meanwhile, on-the-run bond yields inched 6bps higher on average as traders went short in anticipation of higher rate from the bond auction held today. Notably, the yields on the 12.50% FGN JAN 2026 and 12.40% FGN MAR 2026 bonds – both on offer at the auction – advanced 12bps each to settle at 15.42% and 15.45% respectively.

§ Following the result of the two auctions held today, we expect bearish sentiment to persist as yields converge towards auction levels.