SAT, AUG 26 2023-theGBJournal |Throughout the week, interbank market rates demonstrated an upward trajectory due to liquidity constraints, even in the presence of a N112 billion bond coupon injection into the system.
As a result, the Open Buy Back rate (OBB) underwent a significant increase of 461 bps in a week-on-week analysis, reaching a pinnacle of 24.25%.
Simultaneously, the Overnight rate (O/N) witnessed a substantial surge of 541 bps, culminating at 25.20%.
Anticipating forthcoming FAAC inflows, we foresee rates maintaining their current levels.
At the treasury bills market, due to the prevailing tight liquidity conditions, the Treasury Bills market adopted a cautious stance at the onset of the week, with offers emerging across the yield curve.
This sense of caution was accentuated by the NTB auction held on Wednesday, during which the DMO floated and offered N303.2 billion across the 91, 182, and 364-day maturities despite robust subscription totaling a substantial N1.54 trillion.
The auction’s stop rates settled at 5.19%, 8.00%, and 13.97% for the respective maturities.
In the wake of this auction, investor interest notably gravitated towards the freshly issued 1-year bill, resulting in most trades concluding around the 11.70% range by week’s end.
The 26-Oct-23 paper also witnessed increased demand, prompting a 298 bps week-on-week decline.
As anticipated, the average benchmark yield experienced a decline of 40 bps over the week, ultimately closing at 7.92%.
We forecast lower yields as the market positions ahead of the FAAC inflow expected next week.
At FGN Bond Market, over the course of the observed week, a discernible trend towards increased selling activity was evident in both the short-term and long-term maturities within the FGN Bonds market.
This trend mirrored the previous week’s behavior, resulting in a 26 bps upward movement in the average benchmark yield, ultimately settling at a closing rate of 14.15%.
We foresee cautious activity at the next trading session.
Eurobond Market
Throughout the week, the FGN Eurobonds market exhibited a slightly bullish trend, largely influenced by the US S&P Global Manufacturing PMI, which concluded at 47, falling short of the anticipated 49.30.
Consequently, the average benchmark yield experienced a marginal decline of 29 bps, culminating in a closing rate of 10.93%.
Considering the impact of Powell’s speech today, we anticipate a sense of prudence in the upcoming trading session.
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