Expectations Ahead of The FGN Bond Auction Spurred Improved Activity in FGN Bonds. 

Naira Gains against the USD at the Bureau De Change, Parallel (“black”) Markets Brandspurng
Afolabi Sotunde Illustration Naira

Trading activities improved slightly in the FGN bond space during today’s trading session, as FGN bond coupon inflows from the previous day supported the market.

We noted demand on the 2028s and 2029s papers at around 7.90%-8.00% levels, as market participants reduced their expectations for a higher yield at tomorrow’s auction for the 2027s bond on offer.

We also saw sellers hit bids at the belly of the curve at around 9.00% (especially the 2034 paper) at the beginning of the trading session. However, this was short-lived as bargain hunters stepped in to snap up bonds at these new levels. Consequently, yields expanded by c.6bps on the average across the benchmark bond curve.

We expect a calm trading session tomorrow, and market participants shift their focus to the first and most anticipate FGN bond auction of the year 2021. 

Treasury Bills

It was a tale of two halves in the treasury bills space today with buying interests on the short-dated bills by local banks, supported by OMO maturities while the medium- to long-dated bills remained firmly bearish with sustained supply from offshore participants.

Yields on short-dated T-bills (March to April 2021 T-bills maturities) remained depressed, with an average rate of 0.25% due to demand pressure. The tiny volumes offered by traders on this tenor bucket also made it difficult to match the large appetite for short-dated instruments.

The long end of the curve (December 2021- January 2022) traded within a tight range of 2.10%-2.25% for a larger part of the session with little volumes crossed.

We expect to see some order-driven demand tomorrow as market participants cherry-pick on OMO T-bills offered at attractive levels, especially at the tail of the curve.

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Money Markets

The interbank system liquidity improved significantly to close at c. N530Bn today due to inflows from OMO maturities hitting the system. Consequently, OBB and OVN rates dropped again by c.23bps on average to close at 0.38% and 0.50% in the absence of local banks’ funding activities.

We expect funding rates to remain steady in the money-market space tomorrow, as there are no anticipated significant outflows that would push rates northwards. 

FX Market

Transaction volumes dropped significantly by approximately 61% in the I&E FX window, with tiny volumes ($26.83m) changing hands between market participants in roughly 200 deals, albeit the Naira appreciated by N0.48k. Most banks remained bided for most of the trading session between N390.00/$ and N410.00/$.

At the parallel market, the cash segment appreciated by N1, supported by the weekly FX sales to BDC from the Apex bank. 


Trading activities improved in the SSA Eurobond space today, opening and staying in the green all day as market participants stayed risk-on throughout the session. A larger part of the market movement was seen on the mid and longest-dated bonds for the NIGERIA sovereigns, causing yields to compress across the sovereign curve at an average of 5bps D/D. Similarly, we noted slight recovery for ANGOLA, GHANA, and IVYCST bonds strengthening by -c.3bps, -c.3bps and -c.1bps, respectively.

The NIGERIA Corporates traded on a similar note, picking up steam as buyers improved bids on most of the tracked papers, especially for the ACCESS 21s, ETINL 2024s, and SEPLLN 2022s, which saw the largest movements, shedding -c.18bps, -c.23bps and -c.58bps respectively on the yield.