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Nigeria_Fixed Income Daily: Yields taper at week close

Market commentary

• In the absence of an OMO auction, the interbank Call rate moderated 459bps to 15.33%. At the FX interbank market, the naira depreciated N1.46 to close at N314.77, translating to a 1.3% w/w appreciation.

• As expected, mixed trading emerged in the T-bills market at week open as market participants cherry-picked across the space. Nonetheless, yields declined 5bps on average with the most sizeable yield declines recorded on the 41DTM (-61bps), 139DTM (-74bps), and 202DTM (-87bps) bills, closing at 14.27%, 15.96%, and 18.77% respectively. Similarly, buying remained dominant in the bond market as yields declined 8bps on average across maturities. Notably, yields on the 12.1493% FGN JUL 2034 and 10.00% FGN JUL 2030 bonds declined 16bps and 20bps to 15.14% and 15.12% respectively.

• In the coming week, we expect that the apex bank will continue to conduct OMO auctions in a bid to repress liquidity and consequently keep rates elevated. Given this, we expect yield directions to remain varied at the start of the week.