Nigeria_Fixed Income Daily: Yields rise at week open
- Market commentary
§ At the start of the week, the CBN conducted another OMO auction, offering N30 billion and N40 billion on the 178DTM and 346DTM bills. Whilst no sale was made on the 178DTM bill, the apex bank sold N10.5 billion on the 346DTM at a stop rate of 18.6% (effective yield: 22.58%). Despite this, Interbank Call rate rose just 25bps to close at 10.25%. At the FX interbank market, the naira depreciated N0.50 against the dollar to close at N305.50 at the spot market whilst the one year forward rate remained unchanged at N349.00.
§ Trading turned bearish in the T-bills market today amidst the OMO announcement with yields rising 27bps on average. Sell offs were concentrated on the short-dated bills with yields on the 24DTM (+301bps), 31DTM (+406bps), and 45DTM (+224bps) bills climbing to 15.90%, 14.17%, and 16.18% respectively. Similarly, the bond market traded bearish with yields on benchmark bonds rising 3bps on average. The most notable yield advances were on the 15.54% FGN FEB 2020 and 14.20% FGN MAR 2024 bonds which increased 6bps and 5bps to settle at 15.94% and 15.93% respectively.
§ Considering the tepid market sentiment and the likelihood of another OMO auction, we expect trading to remain bearish in the coming session.
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