Nigeria bond market bearish as yields fell marginally 5bps

The bond market remained slightly bearish Wednesday, with significant sell witnessed on the 2020 bond, which rose by 52 basis points (bps) to 14.44 percent. Yields however moderated slightly downwards by 5bps, with some buy interests observed on the 2037s, while market players also normalized their bid-ask spreads, as they adjusted to the sharp downward trend witnessed in the previous session.

Consequently, analysts are expecting yields to trend downward tomorrow, as market players react to news of an expected T-bill refinancing announced today by the Finance Minister.

The T-bills market was slightly bearish as market players sold off some of their bills especially on the short end in a bid to generate liquidity for their positions.

The CBN did not sell any OMO bill in today’s session, as market players came with very scanty bids (total of about N9bn), following the tight system liquidity and consequent high funding rates in the market. We expect yields to trend downwards tomorrow following news of an expected Eurobond issuance for refinancing of maturing T-bills worth N762.5 billion.

The OBB and ON rates trended upwards to 53.00 percent and 53.08 percent, following the continued funding pressures witnessed by banks in the market.

System liquidity is estimated to close relatively unchanged from its opening levels at N10 billion positive, as there were no significant outflows from the system.

“We expect rates to moderate slightly downwards tomorrow, barring a significant OMO sale by the CBN,” said analysts at Zedcrest Capital Limited.