Nigeria_Fixed Income Daily: T-bills yields decline further at week close

Market commentary

• The CBN announced an OMO auction, offering N50 billion on the 223DTM bill. However, no sale was made. With liquidity relatively unchanged, the interbank Call rate remained at 5.3% at week close. At the FX interbank market, the Naira remained unchanged at NGN199.05/USD after recording an intraday low of NGN198.77/USD.

• Demand remained dominant in the T-bills market (yields down 40bps on average) as yields further converged towards Wednesday’s auction levels. The tail end of the T-bills space remained most attractive as yields declined 83bps on average. Notably, the 13DTM(-142bps), 20DTM (-157bps), and 41DTM (-162bps) bills closed at 5.03%, 4.84% and 4.79% respectively. However, trading in the bond market turned mixed as yield varied across maturities in anticipation of next week’s MPC meeting. Whilst yield on the 15.54% FGN FEB 2020 bond declined 11bps to 11.19%, the yield on the 12.40% FGN MAR 2036 bond advanced 41bps to 12.81%.
• Ahead of the 2-day MPC meeting, we foresee a relatively tepid trading session in the fixed income market at week open as market participants trade cautiously.