Nigeria_Fixed Income Daily: Yields inch further north following mop up
- Market commentary
§ The CBN conducted an OMO auction in today’s session with N50 billion on offer on each of the 191-day and 345-day bills. The apex bank eventually sold N53 billion on the 345-day bill at a stop rate of 18.5% (effective yield: 22.42%) with no sale on the 191-day bill. Subsequently, Interbank Call rate rose 191bps to close at 10.58% despite FAAC inflows today. At the FX interbank market, the naira remained unchanged at N305.25 at the CBN FX spot market whilst appreciating N29.00 to close at N349.00 at the one-year forward market.
§ CBN liquidity mop up spurred widespread sell offs in the fixed income market today. Yields rose 6bps on average in the T-bills market with notable advances on the 16DTM (+157bps), 240DTM (+90bps), and 254DTM (+51bps) bills which settled at 12.78%, 21.01%, and 21.25% respectively. Likewise, the bond market traded bearish as yields on benchmark bonds continued their upward trend, this time up 7bps on average. Notably, yields on the 12.50% FGN JAN 2026 and 12.40% FGN MAR 2036 bonds rose 9bps and 8bps respectively, cracking the 16.00% barrier to settle at 16.05% and 16.03% respectively.
§ With today’s OMO further tightening market liquidity, we expect bearish sentiment to persist in the market and foresee another day of cautious trading ahead of the Primary Market Auction scheduled for tomorrow.
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