System Liquidity Eases Following May FAAC Inflow, Spurs Improved Demand In FGN Bonds

Nigeria Gain Access To ICM, Raising $1.25 Billion In Eurobonds
Nigeria Gain Access To ICM, Raising $1.25 Billion In Eurobonds

Activity picked up in the FGN bonds market, with buying interests seen across the benchmark curve. The 2023s paper was the most active at the short-end of the curve, trading at 11.75% while offers on the 2024s and 2025s remained scarce. 

Bids improved by c.5bps on the average at the belly of the curve, staying around 13.15% levels for most of the session with little offers to match at those levels. Buying interest for the 2035s paper sustained for another trading session, changing hands at 14.00% as investors shrugged off any shown offers below.

The 2049s continued to offer the best yield on the markets, with bids compressing by 15bps D/D to trade at 14.10%, while the 2045s and 2050s were offered around 14.03%. Consequently, yields compressed by an average of c.3bps across the benchmark curve.

We expect the bonds to trade sideways in the interim as yields hit these resistance levels as the month draws to a close.

Treasury Bills

The T-bills market opened trading with a lot of offers seen on the newly issued 1-year NTB, with offers starting around 8.60% as holders of the paper expected demand from lost auction bids to come in strong. As the session progressed, bids remained firmly above 9.30% levels prompting offers to improve higher with trades happening between 9.20% to 9.25%. Improved system liquidity from May FAAC inflows saw some improvement in sentiment in OMO bills, with bids on the 15-Mar-2022 paper hit at 9.50% levels.

We expect trading to continue in similar patterns as investor demand remains focused on NTBs and short-term liquidity funding remains negative for OMOs.

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Money Markets

System liquidity improved opening today, following the inflow from the May FAAC payment the night before. The liquidity inflow saw banks liquidate tenured funding from the CBN lending window, as the Repo lending figures dipped by 50% D/D. Open Buy Back (OBB) and Overnight (O/N) rates closed lower by 50bps on the average to close at 13.00% and 13.50% respectively at the end of the trade session.

We expect rates to elevate to close the week, as banks provide funding for the FX Retail auction tomorrow.

FX Market

Traded volumes at the IEFX space remained healthy, despite a 35% D/D dip, as $305mio was reported as traded. The Naira appreciated by N0.50k to close at N411.00/$, as the range of bids tightened to N400.00 and N420.22 to the dollar.

At the parallel, the Naira continued its downward spiral as both the transfer rates depreciated further by N2.00 to close at N500.00/$. The cash pulled back from the previous losses, appreciating by N0.50k D/D to close at N490.00/$.


The NIGERIA Sovereigns had a mixed and calm trading session, as the previous session’s bullish run cooled today. Demand remained persistent on the short-dated 2022s and 2023s papers, while we saw more offers on the longer-dated 2038s and 2049s.

The NIGERIA Corporates papers continued to rally as demand from local and offshore players persisted for another consecutive session across all the tracked papers. The FIDBAN 2022s and ETINL 2024s were the most active papers during the session, with yields on both papers dropping by 3bps and 6bps respectively.