December 31, 2021/Coronation Research

Summary

• Opening market liquidity was reported at N324.3bn on Friday (24 December ‘21). Overnight and repo rates closed within a range of 12.0-15.0%. Last week, the average NTB yield declined by -4bps w/w to close at 4.4%. This is due to slowdown in investment activities as the year rounds up. Meanwhile, the average yield for OMO bills declined by -1bp w/w to close at 5.4%. 
• As for the secondary market for FGN bonds, the average yield declined by -1bp w/w to close at 11.6%.
• The People’s Bank of China (PBoC) cut China’s one-year loan prime rate by 5bps to 3.8% for the first time since April ’20 in a bid to support growth in the slowing economy amid property debt woes and persistent COVID-19 outbreaks. The five-year loan prime rate was left unchanged at 4.65%. We note that the move followed an earlier decision by the PBoC to lower the required rate of return by 50bps (to 8.4%) in mid-December ’21, signalling China’s intention to continue with their expansionary monetary policies in order to offset economic losses from energy shortages and soft demand.

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