Brent Crude Crossed Above $54 Per Barrel…

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Trading activities slowed down today in the FGN bonds space and also did the bullish train run as the 2049s paper strengthened by approximately 60bps during the week. The early hours of trading opened the day with minimal activities, especially on the 2026s and 2027s papers, which ended up trading within the range of 6.40%-6.50%.

Offers were initially scarce on the 2049s papers causing some desperate bulls to pick it at the sub 8% level; however, by mid-day, we saw more offers come on screen for the 2049s paper and ended weakening by approximately 8bp, closing the day around 8.07% levels on the offers.

Brent Crude Crossed Above $54 Per Barrel Brandspurng

All the offers seen for bonds at the belly of the curve stayed below the 8% levels throughout the session.

We expect the market to continue to weaken as participants refocus their attention towards the different expected surprises the DMO may throw through their much-anticipated 1st quarter auction calendar. 

Treasury Bills

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Despite the high system liquidity in the interbank market, the demand for bills Treasury bills weakened. In contrast, the market stayed offered mainly for short and mid dated bills within 0.10% and 0.60%, but there were no available bids to match despite desperate scouting of these range of bills yesterday.

On the other hand, long-dated bills saw few bids at early hours at around 2.30% levels with no matching offers to seal trade. However, we saw a few offers by close of business at 1.50%, although the bulls were not desperate to pick these offers.

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We expect the market to pick slightly tomorrow as interest shifts to the nearly issued OMO bills in the market. 

Money Markets

System liquidity stood over N1trillon for a third consecutive session as more inflows from OMO maturities drop into the interbank market. Consequently, we saw OBB and OVN rates remained low, closing the day at 0.38% and 0.75%.

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We expect the rate to increase slightly tomorrow following a possible CRR debit for the Apex bank and bi-weekly Retail intervention auction that is set to hold. 

FX Market

The I&E Window traded on a less active note today than yesterday, with traded volumes down 38% ($32.41mio traded) D/D. Rates traded on a tighter band of N7.34k (50k tighter D/D), the closing rate appreciated by N0.83k to close at N393.67/$1. Other market segments remained unchanged on the day.

With CBN expected to inject some liquidity via its bi-weekly Retail FX auction set for tomorrow, we don’t expect any significant movement in rates across the board to close out the week. 

Eurobonds

It was a pretty calm session for SSA Eurobonds despite general strong sentiments persisting for the sovereign papers. The NIGERIA Sovereign curve is strengthened again by another c.4bps as oil prices continue to appreciate in the international space as Brent crude cross above $54, highest seen since Feb 2020.

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The NIGERIA Corporates had a relatively quiet session as well, albeit we noted the highest gains on the ZENITH 2022s (+96bps) closing as the star of the trading session. 

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