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Nigeria_Fixed Income: Yields climb as bearish sentiment persists
Market commentary
- As a result of FAAC inflows, interbank Call rate moderated further, down 575bps to 4% (lowest level in a month). At the FX Interbank spot market, the naira depreciated 23 kobo to close at a record
N310.07.
- Ahead of the MPC decision, the fixed income markets traded significantly bearish. Yields on T-bills rose by 131 bps on average with significant sell pressure evident across all maturities. The largest yield changes were observed on 191DTM (+780bps), 282DTM (+519bps), and 310DTM (+813 bps) bills which closed at 19.00%, 19.85% and 20.47% respectively. Similarly, the bond market traded bearish as yields crept up by 16bps on average. The most notable sell pressure was at the short end of the space with yields on the 15.70% FGN APR 2017, 9.85% FGN JUL 2017, and 9.35% FGN AUG 2017 bond up 92bps, 134bps, and 128bps to close at 18.04%, 19.43%, and 19.24% respectively.
- In response to the 200bps hike in MPR to 14%, we expect the bearish sentiment to persist in the days ahead as we foresee an upward shift in the yield curve.
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