Fixed Income Market Trades Upbeat as Naira Hits ₦500 to USD

Fixed Income Market Trades Upbeat as Naira Hits ₦500 to USD

The fixed income market traded slightly upbeat today, following the renewed interest in long and short-duration bonds, even as investors sold-off the mid-tenured instruments.

At the start of the week, funding pressure substantially eased, even as the financial system liquidity opened slightly lower at N229bn when compared to N295bn on Friday.

Specifically, the Open Buy Back (OBB) and Overnight (OVN) rates fell by 12bps and 6bps to 1.13% and 1.44%, respectively.

“We expect funding pressures to remain subdued throughout the week, mostly supported by OMO maturity estimated at N418.92bn hitting the system tomorrow”, Chapel Hill Denham projected.

The firm further stated that the impact of these should keep a tight lid on funding rates.

In the bond market, yields declined by an average of 1bp across the benchmark curve, thanks to the strong interest in short (-4bps to 5.77%) and long duration bonds (-2bps to 5.77%).

This offset the upward repricing of mid-day to maturity uptick of 2bps to 4.32%.

At the front end of the market, discount rates on benchmark Nigerian Treasury Bills were unchanged at 0.10%.

However, buying sentiments were sustained in the secondary open market operation (OMO) segment of the market, as benchmark OMO bills dipped slightly by 1b to 0.11%.

“We maintain the view that the average yield will remain depressed in the near term.

“Our prognosis is hinged on the combined impact of the substantial OMO maturity profile over the next few weeks, as well as the thin supply of government securities”, Chapel Hill Denham stated.

In the currency market, the exchange rates were unchanged at N379.00, N380.69, N390.25 at the official, SMIS windows, and the I&E Window, respectively.

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However, Naira weakened substantially against the USD by N5.00 or 1.00% to close at 500.00 in the parallel market.

Fixed Income Market Trades Upbeat as Naira Hits ₦500 to USD