Nigeria_Fixed Income Daily: Yields moderate further ahead of MPC decision

Market commentary

• At week open, interbank placement rates declined across all tenors (68bps on average) - with the Call rate down 33bps to 4.9%. At the FX interbank market, the Naira remained unchanged at NGN199.05/USD after recording an intraday low of NGN198.77/USD.

• Ahead of the two day MPC meeting, trading in the fixed income market remained upbeat at week open with demand largely weighted across the tail end of the T-bills and bond space. On the average, yields in the T-bills market declined 18bps. Notably, the 66DTM (-95bps), 87DTM (-57bps), and 101DTM(-101bps) bills recorded the most significant changes to close at 5.19%, 6.07% and 5.53% respectively. Similarly, demand was evident across all traded maturities in the bond market (save for the 12.40% FGN MAR 2036 bond). Particularly, yields on the 15.10% FGN APR 2017 and 15.54 FGN FEB 2020 bonds declined 23bps and 12bps to 9.38% and 11.07% respectively.
• Ahead of tomorrow’s MPC decision, we anticipate a relatively tepid trading session at market open as market participants trade cautiously. However, we expect the modest demand on the short dated maturities to persist as investors stay away from long duration instruments.