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Nigeria_Fixed Income: Markets rally on dovish MPC

Market commentary

• Interbank placement rates advanced across all tenors in today’s session, with the Call rate up 50bps to 8.42%. At the FX interbank market, the Naira remained unchanged for the seventh consecutive session at NGN199.01/USD.

• As expected, sentiment turned positive in the fixed income market today following MPC’s decision to embrace a more flexible exchange rate system. Buying sentiment across all maturities in the T-bills market steered yields 51bps lower on average. Particularly, the 15DTM (-120bps), 120DTM (-109bps), and 330DTM (-89bps) bills recorded the most significant demand, closing at 5.83%, 8.63%, and 12.22% respectively. Similarly, the bulls continued to dominate the bond market as yields across all maturities declined 34bps on average. Notably, yields on the 15.10% FGN APR 2017 and 16.39% FGN JANN 2022 bonds moderated 58bps and 48bps to 11.66% and 13.23% respectively.

• We believe trading in the fixed income market will remain mildly bullish in the coming sessions, riding on the positive commentary from the MPC meeting. Also, we expect inflows from an OMO maturity totaling N83.8 billion to further support demand, particularly on the short-mid dated maturities in the T-bills market.