December 22, 2021/Coronation Research

Summary

• Opening market liquidity was reported at N119.9bn on Friday (17 December ‘21). Overnight and repo rates closed within a range of 11.3-15.0%. Last week, the average NTB yield declined by -2bps w/w to close at 4.5%. This is due to slowdown in investment activities as the year rounds up. At the primary market NTB auction, the CBN offered and allotted N5.8bn worth of NTBs to market participants. The stop rates across two of the three tenors declined; 91-day: 2.4% (previously 2.5%), 182-day: 3.5%, 364-day: 5.0% (previously 5.3%). Meanwhile, the average yield for OMO bills declined by -3bps w/w to close at 5.5%. 
• As for the secondary market for FGN bonds, the average yield declined by -2bps w/w to close at 11.6%.  Last Wednesday, the DMO offered N100.0bn but allotted N98.8bn worth of instruments through re-openings of the 12.50% FGN Jan 2026 (at 11.7%) and 16.24% FGN Apr 2037 (at 13.1%; previously 12.9%).
• Last week, the US Federal Open Market Committee (FOMC) voted unanimously to maintain the key policy rate at the target range of 0.00% – 0.25%. The major highlight of the meeting was the Fed’s decision to rapidly reduce the pace of its monthly net asset purchases. The committee decided that from January ‘22, it would increase its holdings of treasury securities by c.USD40bn per month and agency mortgage‑backed securities by c.USD20bn per month.
• At its December meeting, the European Central Bank voted to keep its key interest rates unchanged and decided on a monthly net purchase pace of EUR40bn in Q2 ‘22 and EUR30bn in Q3 ‘22 under the Asset Purchase Programme (APP).

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