Nigeria_Fixed Income Daily: Yields decline further on improved liquidity
- Market commentary
§ Amidst OMO maturities of N105 billion, the CBN conducted another OMO auction, offering N50 billion apiece on the 175DTM and 343DTM bills. The apex bank eventually sold N14.1 billion and N54.4 billion on the 175DTM and 343DTM bills at respective stop rates of 18.0% and 18.6% (effective yields: 19.70% and 22.54%). With system liquidity still fairly robust, Interbank Call rate moderated 167bps to 3.00%. At the FX interbank market, the naira held at N305.50 against the dollar at the spot market whilst depreciating N29.00 to N378.00 at the one year forward market.
§ Supported by the maturity inflows, the T-bills market traded bullish once again as yields declined 26bps on average. Buying momentum was weighted on the short end of the space with yields on the 21DTM (-324bps), 28DTM (-315bps), and 42DTM (-346bps) bills declined to 9.25%, 9.86%, and 11.29% respectively. Similarly, the bond market traded bullish with yields declining 3bps across the space. Notably, yields on the 12.50% FGN JAN 2026 and 12.1493% FGN JUL 2034 bonds moderated 10bps each to settle at 15.92% and 15.84% respectively.
§ Whilst the improvement in market liquidity presents a case for another bullish session, we believe the CBN would revisit the market tomorrow with another OMO auction. We think this could soften buying momentum in the secondary market.
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