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Nigeria_Fixed Income: Weak sentiment persists as yields race north

Market commentary

• Interbank placement rates inched marginally higher in today’s session with the Call rate up 8bps to 18.9% amidst a relatively unchanged system liquidity. At the FX Interbank spot market, the Naira appreciated 38kobo to NGN294.57/USD.

• Yields maintained an upward trend in the T-bills market today as sell pressure across most maturities in the space pulled yields 131bps higher on average. The most sizeable uptick in yields were recorded across the 86DTM (+257bps), 184DTM (314bps), and 226DTM (+420bps) bills closing at 14.27%, 16.22%, and 17.12% respectively. Yield directions however varied in the bond market today as modest buying interest resurfaced across most maturities amidst a few weighty sell offs. Overall, yields advanced 15bps on average with yields on the 15.10% FGN APR 2017 and 12.1493% FGN JUL 2034 bonds up 141bps and 31bps to 15.53% and 14.95% respectively.

• At tomorrow’s T-bills PMA, the CBN will be offering N128 billion across the 91DTM (N37 billion), 182DTM (N39 billion) and 364DTM (N52 billion) bills. Amidst the higher inflation figures and tight system liquidity, we expect stop rates to close higher at this auction relative to the previous auction levels. That said, we foresee a relatively tepid trading session in the fixed income market tomorrow ahead of the auction outcome.