It was a tale of two at the FGN bond space today, as the bond spaced opened the week generally bearish with the market oozing with sellers at the early hours trading session. Still, this bearishness eventually turned at the curve’s tail.
We witnessed the market trades’ chunk at the curve’s belly and a few 2026s-2029s papers. Most of the trades for the mid-dated bond printed at an average of 8.50%, while for the 2026s/2027s at around the mid 6.00% and the 2028s/2029s traded within the range of 7.50%-8.00%.
We also noted some sellers at the early hours for the long-dated bonds, which started off selling around 9.00% levels but dropped by approximately 50bps as demand from opportunistic investors was witnessed on this bond.
Despite all this, the bid/offer spread opened wide and widened further during the day, consequently causing the benchmark yields to expand by an average of 52bps across the sovereign curve compared to Friday’s closing.
We expect the market activities to persist for the week with a bit of profit-taking from local investors who are seeking to close their book positive for year-end.
Treasury Bills
Activities in the T-bills market continued to drag, with few interests seen as offers improved across many papers. The market printed a few trades on the latest OMO issue, the 21-Dec bill, which was initially offered at 2.50% but increased by 40bps by close of business.
These bills saw most of the market Joy as it was offered better than its pairs with other January papers offered around a 1.80% level. All other papers were relatively inactive for most of the trading session, although rates expanded slightly by c.5bps across the OMO/NTB curve.
Market momentum is expected to remain sluggish despite buoyant liquidity availability to support demand for the bills supplied.
Money Markets
As expected, Interbank rates remained at the sub-one levels with a slight movement upward while we saw lots of banks remain awash with liquidity. Thus, we saw OBB and OVN rates close the day at 0.50% and 0.88%, respectively.
We expect interbank rates to remain at the sub-one percent levels during tomorrow’s session since the market does not envisage any significant outflow to cause otherwise.
FX Market
The liquidity squeeze persevered in the interbank IEFX market, although we saw more trade volume (c.$90.09M) pass through the market today, with the rate depreciating slightly by 1.50k.
The few trades consummated were mainly client induced, although most banks remained bided between N390 and N395 to the dollar as the Apex bank slowed down in the daily FX sales intervention in that space. Other FX market segments remained unchanged with little or no activity passing through these windows to affect rates significantly.
Eurobonds
The NIGERIA Sovereign tickers slide slightly as demanded persisted in today’s session. We noted better bids across the sovereign curve, most especially in the mid and long-dated maturities. Consequently, yields expanded by an average of c.3bps across the sovereign yield curve.
Similarly, the NIGERIA Corps tickers traded on a bullish note, except for the ACCESS 2021s and ZENITH 2022s, which expanded by +c.19bps and +c.6bps compared to Fridays’ closing.
