Market Appetite For Fixed Income Securities Remains Weakened

The Federal Government of Nigeria bond space market appetite for bonds (Fixed Income Securities) dampened Monday, compared to yesterday, Sunday ending the week on a rather drab note.

While rates continue to improve across the curve, market participants remained on the side-lines, cherry-pick on few bonds, particularly the long-dated bond. We saw a few trades print on the 50s maturities at the 7.50% levels. Despite the less active market, yields compressed by an average of c.5bps across the curve.

We expect the market for bonds to remain to dampen next week, as market participants continue to cherry-pick on selected bonds offered at an attractive level.

Afolabi Sotunde Illustration Naira

Fixed Income Securities: Treasury Bills

The T-bills market stayed in-active, for a third consecutive session, despite a buoyant liquidly market. We observed slight demands mid-dated NTBs, which ended the day trading with 0.25%-0.30% levels. On the contrary, the longer-dated OMO bill (14/Dec maturity) saw no joy in today’s market, which started the offered around 0.90% but jumped almost 60bps to close on the offer at 1.40%. Despite this attractive offer, the market seems to be less interested in trading this maturity. By and large, the NTB and OMO bills curve stayed unchanged day on day.

For next week, market activities might increase slightly, supported by a buoyant market as banks cherry-pick on OMO/NTB bills offered at an attractive level.

Money Markets

Money market rates jumped by an average of c.338bps slightly by c.66bps. This was as expected because, despite buoyant system liquidity opening of c.N857.19, the outflows from bond auction funding and FX Retail hit the system the same day, causing it to drop aggressively. Consequently, OBB and OVN rate to close the day at 4.50%, singly.

We expect these slightly increased rates to drop during next week’s market sessions as there is no significant outflow hitting the system next week.

FX Market

Rates remained relatively stable in the FX market, as supply level remained low for most of the trading session, causing no change in closing rates at the ‘official’ trading segments. Consequently, all other market segments remained unchanged, with the cash and transfer market closing the day at N475/$ and N490/$, respectively.

Eurobonds

The NIGERIA Sovereign tickers had a second consecutive bullish session, supported by the continued recovery in crude oil prices and increasing demand from local participants. Yields dropped by an average of c.05bps across the sovereign yield curve.

The NIGERIA Corps tickers were also mostly bullish, especially the ACCESS 21s and UBANL 22s, which strengthened by 58bps and 20bps.