Fixed Income Markets Close The Week On A Whimper Ahead Of Inflation And Supply Expectations

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The FGN Bonds market screeched to a halt in the last trading session of the week, as the recent demand seen in the market dried had up ahead of the inflation report and monthly bond auction both scheduled for next week.

Yields at the long-end of the curve closed higher as we saw more supply of the 2036s and 2050s papers which changed hands at 12.60% and 12.90% levels respectively as both papers will be re-issued at the coming bond auction. Ironically, the supply on the 2049s paper remained scantly, with bids firmly placed at 12.70% but with not offers to match.

Consequently, yields closed the week down by a single basis point on the average across the benchmark bond curve.

We expect a cautious open to trade in the coming week, as market participants look towards the inflation figures for July 2021 due on Monday. The monthly FGN Bond auction for August is also scheduled for midweek and with market levels significantly lower than the last bond auction rates we expect yields to weaken as market expectations are priced in ahead of the auction.

Agusto & Co. assigns a fund credit quality rating of  Af and fund volatility rating of FV5 to Coronation Fixed Income Fund

Treasury Bills

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The treasury bills market closed the week with residual demand present from the week’s bi-weekly primary auction. The 1-year paper (11 Aug 2022) traded 10bps lower, with bids firmly put at 6.70% levels but supply seemingly dried up. Demand was also seen on the 28 July 2022 paper on the day, but with offers stuck 15bps lower at 6.55% levels trades were scarce on the paper.

We expect trading activities to remain tepid at the opening next week as tight system liquidity hampers position-taking by local banks.

Money Markets

Money market rates remained at double-digit levels closing the week by +2bps on average from yesterday’s closing. System liquidity remained low at +N11.98BN as some participants stayed camped at the CBN Repo window while others continue to source for deposits from large businesses. Subsequently, OBB and OVN rates closed the week at 16.75% and 17.25% respectively.

Next week, we expect rates to remain around the double-digits level and most likely inch higher towards the end of the week as banks sort to raise funds for the bi-weekly FX retail intervention and bond auction amidst the tight system liquidity.

FX Market

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Supply at the IEFX window improved during the week which was largely supported by inflows from export proceeds. Traded volumes stayed well above $100m albeit remained unchanged compared to yesterday’s figure while market participants stayed bided between N400/$ and N420/$ range. Rates closed the day at N410.80/$ appreciating slightly by 0.21% D/D.

At the parallel market, the cash and transfer window moved in opposite directions. The cash window appreciated by N1.000k on the day as demand weakened slightly to close the day at N513.00/$ while the transfer rate depreciated by N2.00k D/D to close at N520.00/$.


It was an uneventful trading week in the Emerging market space especially for most of the SSA sovereigns’ papers. Prices opened flat from yesterday’s closing levels although we saw few tractions on the GHANA 27s and NIGERIA 31s papers with its price moving by +15cents a piece D/D.

The Nigerian Corporates also closed the week on a very quiet note although the ETI papers (ETINL 24s and ETINL 31s) remained the market toast as sustained demand caused prices to gain slightly by 3cents and 4cents respectively.

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