Bond Trades Flat as Naira Maintains Position against Dollar
The bond market closed flat on Monday as Naira maintains its position against the United States dollar at the investors and exporters window. Despite declining external reserves serving as a buffer for the local currency, the Nigerian naira traded at N411.13 for a dollar at the Investors’ window and N503.00 in the parallel market, respectively.
In the money market segment, the overnight lending rate contracted by 175 basis points to 10.8%; as analysts attributed the decline to the absence of significant funding pressures in the financial system.
Meanwhile, the Nigerian Treasury Bill secondary market was mixed, albeit towards a bearish sentiment, as the average yield expanded by 4 basis points to 6.6%, according to separate market reports obtained by MarketForces Africa on Monday.
Cordros Capital said in its market report that across the benchmark curve, average yield expanded, gaining 9 basis points at the long end following sell-offs of the 269-day to maturity bill.
Also, fixed income analysts reported that the short and mid segments closed flat. Elsewhere, the average yield at the open market operations (OMO) segment pared by 1bp to 9.9%.
According to Cordros Capital report, trading in the Treasury bond secondary market closed flat but with a bearish tilt, as the average yield was unchanged at 11.5%.
Across the benchmark curve, average yield expanded at the mid (+4bps) segment following sell-offs of the JUL-2030 (+7bps) but contracted at the long (-1bp) due to demand for the APR-2037 (-13bps); the short end was flat.
Last week, the Nigerian Treasury Bills secondary market took a bullish turn, supported by N201.3 billion which boosted the financial system liquidity on Wednesday as market players sought to fill lost Primary Market Auction bids.
Consequently, average Treasury Bills secondary market yields declined 32 basis points week on week to 6.6% from 6.9% the previous week.
Afrinvest said in a market report that at the PMA that held on Wednesday 29-Jun-21, the apex bank offered bills worth a total of N163.6 billion split as: N81.8 billion higher than its initial N81.7 billion offer across the 91- (N2.2 billion), 182- (N3.3 billion) and 364-Day (N158.0 billion) tenors.
Stop rates on the 91- and 182-Day maturities remained unchanged while the 364-Day offers were cleared at 9.15%, slightly dipping 25 basis points from 9.40%.
“Going into the week, we expect Nigerian Treasury Bills secondary market yields to move northwards given the overall dearth in system liquidity which resurfaced last week (closing the week at N36.1bn short on Friday).
“However, we anticipate improved system liquidity during the week due to maturing Treasury Bills worth N58.01 billion. Thus, we advise investors to take advantage of maturities that may improve along the curve”, Afrinvest stated.
Bond Trades Flat as Naira Maintains Position against Dollar
