Bonds
Activities in the bond market were muted as participants awaited the results of the DMO’s FGN Auction.
Yields closed at c.14.63% on the average, a 1bps DoD change, as pockets demand seen at the short-end countered sell-offs witnessed at the mid- to long-end of the curve.
Results at the bond auction showed a continued weakness in demand for bonds, as the stop rates closed higher than the previous month for the fifth consecutive month. The DMO raised c.N39.7bn, only 44.11% of the total offer size. Stop rates rose by c.56bps from their previous level, with the highest uptick witnessed on the 2023s (+70bps).
We expect the recent bearish trend in bonds to retrace tomorrow, as investors look to the secondary market to fill demand lost at the auction.
Treasury Bills
T-bills market witnessed a quiet trading session with a bearish bias, as investors awaited the results at the Primary Market Auction conducted by the DMO. The NTbills yield curve consequently expanded by c.4bps to close at c.11.87% on the average.
The DMO rolled over the total amount of maturing T-bills, maintaining stop rates as the previous auction except for the 364-day which declined by 8bps. A total of N33.38bn was sold across the 91-, 182- & 364-day maturities.
We expect rates to drop tomorrow as system liquidity increase via inflows from OMO T-bill maturities.
Money Market
The OBB and OVN rates trended lower today to close at 9.50% and 10.08% respectively, as system liquidity closed at c.N160bn positive. We expect funding rates to decline tomorrow as inflows via OMO maturities of N440bn hit the system. The CBN is however expected to float an OMO auction to counter these inflows.
FX Market
The Naira remained stable at both the interbank and I&E FX window, closing the day at N306.05/$ and N362.25/$ respectively. At the parallel market, the Naira depreciated by N0.30 to close at N359.50/$ at the cash market and transfer rates down by N1.00 to close at N362.00/$.
Eurobonds
The NGERIA Sovereigns continued to rally as yields compressed by c.6bps on the average along the Sovereign curve. Demand was most prominent on the 2027s & 2032s, whose yields compressed by 14bps and 10bps respectively.
Demand for the NGERIA Corps slowed at today’s trading session, with yields trending lower by c.2bps on the average across the curve. The DIAMBK 19s and UBANL 22s witnessed the most demand, as yields compressed by 9bps and 10bps respectively.
