Sighs of Relief in The FGN Bond Space as Improved Local Demand Calms Market Bearishness

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The FGN bond space saw a bit of calmness taking a break from the bearishness witnessed for the past couple of weeks as demand from local investors and EOM short-covering strengthened prices on selected papers.

The 2034s and 2049s attracted the most of the market demand, seeing the largest downward yields movement as offers dropped significantly to 10.05% and 10.45% levels, respectively, from the previous day’s 10.45% and 10.75%. Subsequently, yields compressed across the benchmark curve by -c.20bps.

We expect market participants to take new positions that support their various strategies while demand from local investors on the selected papers should also continue in the new month.

Treasury Bills

The treasury bills market closed the week on a quiet note, although with a bearish tilt as the offshore participants continue to aggressively offer their OMO T-Bills holdings in a bid to take some EOM profits.

We saw some early hour rush for the 18th Jan 2021 bills, which was offered better than other January 2021 papers at above 5% levels. However, by mid-day, the market recoiled into its shell while bids became scarce for the rest of the session despite the improved offers shown for most T-bills papers.

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We expect improved activities in the treasury bills space for next week, as traders take advantage of the improved offers while taking strategic positions in the new month.

Money Markets

Money market rates increased by an additional 125bps compared to yesterday’s rates as low liquidity levels continue to pressure the smooth sail of business activities.

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System figures opened the day at c.N110.65B positive, with most banks remaining camped at the SLF window throughout the session. Consequently, OBB and Overnight rates closed the day at 10.50% and 11.00%, respectively.

We expect funding cost to remain elevated for a larger part of next-week as expected outflows outweigh inflows hitting the banking system. 

FX Market

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The I&E FX window closed the week on a drab note as volumes traded ($24.39m) dropped significantly by another 35% DoD while most banks remained firmly bided to close the week.

At the parallel market, the cash market closed 0.32% higher than yesterday, with the Naira depreciating by N1.50K due to increased business activities and the continued shortage of FX supply. The transfer segment remained unchanged, closing the week. 


Trading activities in the NIGERIA Sovereigns space were mostly quiet, with trading volumes staying slim for the session. The bulk of the action was seen at the curve’s belly, especially on the 2031s and 2032s, as yields compressed by an average of c.2bps across the sovereign curve.

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In the SSA space, the Angola papers pulled back some recent losses to outperform other SSA sovereign papers (Ivory Coast, Egypt and, Ghana), as yields compressed by -c.6bps D/D on the 2025s.

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The ETINL 2024s paper was the most active of the NIGERIA Corps tickers, as the paper’s yield rallied by approximately 24bps, while yields remained mostly unchanged on all other tracked papers.

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