The bond market traded on a very quiet note with yields rising higher at the close of last week, following the relatively higher clearing rates at the previous day’s auction.
Yields however moderated slightly during the trading session as some client demand came into the market especially on the 2021 and 2027 bonds.
Average bond yields however closed higher by c.9bps d/d, as market players stayed relatively cautious, with bids maintained at and above auction levels. We anticipate a slight decline in yields tomorrow, with some client demand expected to take them slightly below current levels.
The T-bills market traded on a relatively flat note as market players opted for the OMO auction by the CBN. The CBN sold a total of N125m 111-day and N113bn 231-day bills, with rates maintained at 11.05% and 12.15% respectively. We expect yields to trend slightly lower tomorrow due to improved system liquidity.
The OBB and OVN rates crashed to 7.75% and 8.42% respectively. This was on the back of inflows from OMO maturities (c.267bn) which helped offset outflows for today’s OMO auction sales (N113bn) by the CBN.
System liquidity is consequently estimated to close at c.N165bn positive from c.N10bn opening today.
The Nigeria Sovereign Bonds maintained its firm bullish recovery with yields compressing by c.7bps across the curve. This was as offshore clients relaxed their risk off stance following minutes of the previous day’s FED Minutes indicating a softer stance on inflation and a consequent dip in USTs, with the 10yr slightly below the 3% mark. Investors were mostly bullish on the 2032s and 2038s which gained +0.60pt and +0.85pt respectively.
