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Nigeria_Fixed Income Daily: Yields moderate on penultimate trading day of the year

• Market commentary

§ The CBN conducted an OMO auction today, offering N30 and N40 billion on the 196DTM and 357DTM bills respectively. The apex bank eventually sold N14 and N56 billion at respective stop rates of 18.0% and 18.6% (effective yield: 19.93% and 22.74%). Despite this, Interbank call rate declined to 9.47% (prev: 15.33%) – largely supported by net inflow from OMO maturity. Meanwhile, at the FX interbank market, the naira once again remained unchanged at N305.25 and N378.00 against the dollar for the spot rate and one year forward rate respectively.

§Trading on the T-bills market remained mixed (albeit with a bullish bias) with no clear cut pattern. Yields moderated 3bps on the average with the 91DTM (-133bps) and 35DTM (-40bps) bills recording the largest declines to close at 12.44% and 16.65%. In contrast, yields on the 7DTM (+112bps), 21DTM (+65bps) and 112DTM (+30bps) bills advanced to settle at 14.30%, 14.85% and 15.56% respectively. Save for a few maturities, the bonds market traded bullish with modest demand across the space. Notably, most of the declines were recorded on the long end of the space as yields on the 12.1493% 18 JUL 2034, 12.50% 22 JAN 2026 and 8.50% 20 NOV 2029 moderated 4bps apiece to close at 15.50%, 16.09% and 15.86% respectively.

§ Notwithstanding today’s relatively bullish trading pattern, we maintain a cautious stance on tomorrow’s session, particularly in the T-bills market as we foresee another possible OMO mop up from the apex bank at week close.