Debt Market Trades Upbeat amid Renew Interest in Long-dated Bond
The fixed income market traded upbeat as market witnessed renewed interest in long duration bonds, following the bullish Nigerian Treasury Bill (NTB) auction on Wednesday.
However, front end rates traded mixed, as the benchmark Open Market Operations curve eased slightly by an average of 3bps to 0.55%.
Meanwhile the NTB curve expanded by an average of 11 basis points to 0.56%, due to upward repricing of mid-day to maturity (+47bps to 0.76%).
In the bond market, yields declined by an average of 4bps across the benchmark curve, thanks to strong interest in long duration bonds (-14bps to 5.42%).
Chapel Hill Denham said, “We think the strong liquidity backdrop remains supportive of low yields in the fixed income in the near term, and remain overweight risk assets including equities and long duration bonds”.
Interbank funding pressures remained benign Friday as financial system liquidity remained buoyant, opening slightly higher at ₦794 billion from ₦790 billion on Wednesday.
As a result of that, money market rates closed at low single-digit.
Notably, the Open Buy Back (OBB) rate closed flat at 1.00%, while the Overnight (OVN) rate eased further by 38bps to 1.25%.
“We expect funding pressures to remain benign for the most part of next week, partly buoyed by OMO maturities on Tuesday worth ₦224.45 billion”, Chapel Hill Denham.
Analysts said liquidity could however become tighter on Friday due to the CBN’s retail foreign exchange auction.
A fresh batch of OMO maturities is expected next week, with no meaningful primary market activity to absorb the liquidity.
Meanwhile, naira to dollar exchange rate continued to trade within a tight band at the regulated segments of the FX market.
Naira weakened marginally against the USD in the I&E Window by 9bps or 33kobo to ₦386, and closed flat at ₦379.00 in the official window.
Also, the local unit strengthened by ₦3.00 or 0.65% in the parallel market to ₦462.00.
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Debt Market Trades Upbeat amid Renew Interest in Long-dated Bond
