May 6, 2022/Coronation Research

Summary

• Opening market liquidity was reported at N163.3bn on Friday (29 April ‘22). Overnight and repo rates closed within a range of 11.5- 13%.   The average NTB yield decreased by -8bps w/w to close at 3.7%. At the primary market NTB auction held last week, the CBN offered N120.9bn but allotted N130.1bn worth of NTBs to market participants. The stop rate rose in one of the three tenors; 91-day: 1.74%, 182-day: 3.0%, 364-day: 4.8% (previously 4.6%). This was largely due to improved system liquidity on the back of NTB maturities of N116.3bn and coupon payments of N16.6bn. Meanwhile, the average yield for OMO bills increased by 21bps w/w to close at 4.2%. 
• The secondary market for FGN bonds was relatively active. Yields trended downwards selectively. At last week’s primary market FGN bond auction, the DMO offered N225bn but allotted N348.6bn worth of instruments through a new issue of APR 2032 bond (12.5%) and the re-openings of the 12.5% FGN Mar 2025 (10.0%) and 13.0% FGN Jan 2042 (12.9%, previously 12.7%). Demand was high as subscription hit N409.4bn.
• At the Eurobond market, yields also trended upward for all sovereigns under our coverage.
• At its latest meeting, the Federal Open Market Committee (FOMC) voted to increase the target range for the federal funds rate to 0.75% – 1.00% and announced plans to reduce its USD9trn asset portfolio starting in June ’22 to combat the rising inflation.

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