Nigeria_Fixed Income Daily: Yields race north on tighter liquidity
​For the second consecutive day, the CBN conducted an OMO auction, offering N50 billion each on the 251DTM and 356DTM bills. The apex bank eventually sold N47 billion and N160 billion on the 251DTM and 356DTM bills at respective stop rates of 18% and 18.5% (effective yields of 20.54% and 22.57% respectively). Despite the mop up, Interbank rate moderated 333bps to 13.50%. At the FX interbank market, the naira appreciated N5.28 to close the week at N307.79.
Fixed income markets closed the week markedly bearish on the back of recent liquidity tightening. The T-bills market closed with yields up 44bps on average as the 76DTM (+188bps), 202DTM (+168bps) and 230DTM (+185bps) bills closed higher at 17.00%, 19.57%, and 20.10% respectively. Meanwhile, the bond market halted its bullish streak as yields on benchmark bonds advanced 11bps on average. Sell pressure was spread across the space with yields on the 15.54% FGN FEB 2020 and 12.1493% FGN JUL 2034 bonds up 25bps and 15bps to 14.60% and 14.77% respectively.
Next week, we expect the market to open on a cautious note as market participants anticipate further liquidity mop up from the CBN.
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