Yields on Bonds, T-Bills, OMO End Flat as Naira Gains
There was no surprise in the fixed income market today as the average yields on fixed interest instruments were steady Thursday amidst Santa Claus escape in the equity market space, falling third consecutive trading sessions ahead of Christmas Celebration.
At the investors and exporters foreign exchange window, Naira, the Nigerian local currency, appreciated by nine (9) basis points as the United States dollar was quoted at N414.73 as against the last close of N415.10.
The local currency also gained at the parallel market due to inflow from the diaspora, trading within N560 to N570. Analysts said most participants at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) maintained bids between N404.00 and N444.00 per dollar.
For Nigeria’s financial market, investment space has been heated up albeit negative for returns as investors continue to see weak returns. In the fixed income market, trading activities have been weak due to a lack of catalyst to drive upward yield repricing.
Low fresh instruments issuance, declining inflation rate and high subscription levels in the primary market auction have also impacted yield movement, according to some analysts – Debt Management Office (DMO) has met the borrowing target for 2021.
Today, the average interbank rate dropped by 638 basis points to close at 7.75%, following declines at both the Open Buy Back rate and Overnight rate, according to Alpha Morgan Capital.
Data tracked from the FMDQ Exchange platform shows that the Overnight rate decreased by 625 basis points to close at 8.00 per cent as against the last close of 14.25 per cent.
Also, the Open Repo rate decreased by 650 basis points to close at 7.50 per cent compared to 14.00 per cent on the previous day. Trading activities at the Nigerian Treasury bills secondary market closed on a flat note with the average yield across the curve remaining unchanged at 4.46 per cent.
Average yields across short-term, medium-term, and long-term maturities closed flat at 3.39 per cent, 3.98 per cent, and 5.26 per cent, respectively, according to FSDH Capital note.
With no fresh issuance by the Central Bank, the average yield across the OMO market curve closed flat at 5.45 per cent. Average yields across short-term and long-term maturities remained unchanged at 5.43 per cent and 5.53 per cent, respectively.
In the bonds space, trading activities on Federal Government of Nigeria (FGN) bonds IN the secondary market closed on a flat note as the average yields across the curve closed flat at 8.10 per cent on Thursday.
Average yields across short tenor and medium tenor of the curve remained unchanged. However, the average yield across the long tenor of the curve increased by 2 basis points, according to analysts notes.
Meanwhile, FSDH Capital Limited spotted that the FGNGB 16-JUN-2023 bond was the best performer with a decrease in the yield of 2 basis points, while the 27-MAR-2050 maturity bond was the worst performer with an increase in yield of 17 basis points.
Analysts keep to their prediction that the secondary bond market is likely to remain subdued in the short term. Elsewhere, trading activities at the FGN Eurobond market traded on a bullish note as buying interests was witnessed across the sovereign curve.
Due to demand for the instrument, the average yield declined slightly by one basis point to close at 7.44 per cent.
#Yields on Bonds, T-Bills, OMO End Flat as Naira Gains >>> Read Also: Yields on Fixed Interest Securities Rise Amidst Liquidity Pressures
