Fixed Income Market Trades Quiet as Naira Falls
The average yields on Nigerian Treasury bills were flattish while Federal Government of Nigeria (FGN) bonds track lower on Wednesday following the apex bank primary market auction. In the open market operation segment, OMO Bills traded on a quiet note, keeping yield unchanged.
At the Central Bank of Nigerian Auction, the authority offered Nigerian T-Bills worth ₦94.00 billion across 91-day (₦1.55 billion), 182-day (₦11.88 billion), and 364-day (₦80.57 billion) tenors.
According to traders’ notes, the auction was oversubscribed as expected on account of better liquidity and a dearth of alternative investment options. Some Pension Fund Administrators were seen positioning amidst volatile trading sessions seen in the past five sessions at the equity space.
At the money market, the average interbank rate declined further by 46 basis points to close at 4.38%, as both overnight lending and open buy back rates sloped downward.
The overnight lending rate decreased by 42 basis points or 0.42 percent to close at 4.75 percent as against the last close of 5.17 percent. Also, the open repo rate decreased by 50 basis points or 0.50 percent to close at 4.00 percent compared to 4.50 percent on the previous day.
Amidst cautious trading session in the secondary market, trading activities at the Nigerian Treasury bill secondary market was quiet, with little to no trade executed across the curve.
Consequently, the average rate remained flat to close at 3.45% following declining spot rates at the CBN previous auction as the market awaits auction result for today as of press time.
Traders’ notes shows that average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.11 percent, 3.41 percent, and 3.74 percent, respectively.
Due to thin trading in the OMO bills market, the average yield across the curve closed flat at 3.92 percent. The average yield across the long-term maturities remained unchanged at 3.92 percent.
At the bond segment, activities at the FGN bond secondary market was bearish as the 2025s paper witnessed the most traction, also, the 2028s, 2036s, 2037s, and 2050s papers saw some buying interests.
Consequently, fixed income traders said in their separate market notes that the average yield dropped by 7 basis points to close at 10.37%.
For FGN Eurobond, traders at Alpha Morgan Capital said trading activities Eurobond market held on to the bullish theme from the prior session spurred by the anxiety of investors not participating and missing out as big game investors came into the market.
In sum, the average yield was down by 42bps to close at 7.95%. Today, Nigerian local currency fell 0.12% against the United States dollar at the Investors and Exporters FX window to close at N416.50.
