September 20, 2021/Coronation Research

Summary

• Opening market liquidity was reported at NGN312.8bn on Friday (17 Sep ‘21). Overnight and repo rates closed within a range of 16.5-20.0%. The secondary market for NTBs was largely bearish due to the increased supply of NTBs and OMO bills from the auctions in the past weeks. As a result, the average NTB yield rose by 66bps w/w to close at 5.6%. The average yield for OMO bills also rose by 12bps w/w to close at 6.3%. Last week, the CBN allotted NGN155.9bn worth of NTBs to market participants as it maintained the stop rates across all three tenors (91-day: 2.5%, 182-day: 3.5%, and 364-day: 7.2%). At Thursday’s OMO auction, the CBN allotted N20bn worth of OMO bills across all three tenors and the stop rates remained unchanged from the previous auction (91-day: 7%, 187-day: 8.5%, 334-day: 10.1%).
   
• The secondary market for FGN bonds was bearish in response to sell-offs during the week. This led to the average yield increasing by 22bps to close at 11.3%. Meanwhile at the Eurobond market, the average yield of the sovereigns under our coverage increased 4bps to 5.8% w/w.
   
• According to the U.S Bureau of Labour Statistics, headline inflation in the United States eased to 5.3% y/y in August from 5.4% reported in July. Prices rose 0.3% m/m in August compared to 0.5% in July. However, inflation remains above the Federal Reserve’s target of 2.0%, driven by pent-up demand following the ease of COVID-19 restrictions, supply chain disruptions on raw materials and shortage of semiconductors.

For the full Coronation fixed income and exchange rate (CFEX) update, please click here