October 26, 2021/Coronation Research

Summary

• Opening market liquidity was reported at N56.3bn on Friday (22 Oct ‘21). Overnight and repo rates closed within a range of 15.0-20.0%. Last week, the average NTB yield increased by 18bps w/w to close at 5.4%, as local banks sold off instruments in order to participate in Wednesday’s FGN bond auction. Meanwhile, the average yield for OMO bills decreased by 3bps w/w to close at 6.4%. At Thursday’s primary market OMO auction, the CBN allotted N30bn worth of OMO bills across all three tenors and the stop rates remained unchanged from the previous auction (103-day: 7.0%, 180-day: 8.5%, 348-day: 10.1%).
• As for the secondary market for FGN bonds, the average yield increased by 6bps w/w to close at 11.4%. Last Wednesday, the DMO offered N150bn and allotted N192.8bn worth of instruments through re-openings of the 12.50% FGN Jan 2026 (at 11.7% previously 11.6%), 16.24% FGN Apr 2037 (at 12.9% previously 12.8%), and 12.98% FGN Mar 2050 (at 13.2% previously 13.0%). 
• According to China’s National Bureau of Statistics, China’s economy grew by 4.9% y/y in Q3 ‘21, after a 7.9% y/y rise in Q2 ‘21. The slowdown in China’s growth was driven by base effects, real estate challenges, power supply restrictions and supply chain constraints.
• Eurozone inflation rose to 3.4% y/y in September compared with 3.0% y/y recorded in August. This is above the European Central Bank’s 2% target and is mainly due to a 17.6% y/y increase in energy prices.