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Published On: Thu, Sep 6th, 2018

Bond Yields closes at 15% as market goes bullish

The Nigerian bond market was bullish on Wednesday on the back of increased participation local and off-shore investors in the mid- to long-end of the curve, which propelled average yields to compress by 4 basis points to close at 15.11 per cent.

The 2027s & 2028s at the mid-end and 2037s at the long-end of the curve were the major gainers.

Investors have shift their focus to the fixed income segment of the capital market following continuous plunge of the equity market, which has lost -22.21 per cent in the last six months as foreign portfolio investors exit the market in droves.

“We expect the market to remain be order driven as investors pick out attractive yields offered. We however remain wary of external factors, including weak EM sentiments as this could provide risk-off investors with opportunities to exit positions on local bonds,” said analysts at Zedcrest Capitals.

Meanwhile, the T-bills market continued to trade bullish underpinned on improved liquidity. Average yields close at 11.51 per cent across the NTBills as curve compressed by c.13bps.

The CBN floated a second OMO auction this week, expanding its offering to three maturities as it looked to aggressive attack excess liquidity. The Apex bank sold a total of N137.59bn across the 64-. 127- and 190-day maturities with stop rates at 10.00 per cent. 11.50 per cent and 12.15 per cent respectively.

Analysts at Zedcrest Capitals expect bullish sentiments on T-bills to remain as system liquidity levels remain high. “We also expect the CBN to maintain its stance on rates at subsequent OMO auctions, with another expected tomorrow,” they stated.

More so, interbank lending rates remained relatively stable amidst buoyant System liquidity, despite another OMO auction sale by the CBN.

The Open Buy Back and Over Night rates  closed at 3.17 per cent  and 4.00 per cent respectively, as System liquidity is estimated to close today at c.N509.44bn net positive.

The CBN sold a total of N137.59bn at an OMO auction today as it continues its strategy to manage liquidity levels.

“With inflows from OMO maturities of N294.52bn expected tomorrow, we expect the CBN to float an OMO auction for the third time week to counter the maturities. We thus rates to remain relatively stable,” Zedcrest Capitals projected.

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