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Nigeria_Fixed Income Daily: Yields trend higher following OMO auction

Market commentary

• The CBN sold N75.5 billion of the 357DTM bill at an OMO auction in today’s session, clearing at a stop rate of 17% (effective yield: 20.39%). Following this, the interbank Call rate advanced 134bps to 21.2%. At the FX Interbank spot market, the Naira appreciated N16.20 to NGN310.43/USD.

• Following the higher rate from today’s OMO, yields trended northwards in the fixed income market. The T-bills market recorded a 63bps yield advancement on the average with the most sizeable adjustment weighted on the short end of the space. Yields also rose 21bps on average in the bond market with the sell pressure most evident on the long end. Particularly, yields on the 14.20% FGN MAR 2024 and 12.40% FGN MAR 2036 bonds rose 49bps and 33bps to close at 15.51% and 15.32% respectively.

• At week close, we expect to see further upward adjustment in the yield curve as market sentiment remains week. That said, we expect a relatively tepid trading tempo ahead of next week’s MPC decision.