July 10, 2023/Coronation Report

Summary

• Opening market liquidity was reported at N822.8bn on Friday (07 July 23). Call, overnight, and repo rates closed within a range of 1% – 4%, as system liquidity improved. This week, we expect rates in the money market to trend upwards as the projected outflow from an NTB, and OMO auction as well as a potential CRR debit by the CBN would likely outweigh expected inflow from an NTB maturity.
• The average NTB yield increased by +31ps to close at 6.7% w/w.  
• As for the secondary market for FGN bonds, the average yield decreased by -4bps to close at 12.9% w/w.
• In the Eurobond market, the average yield increased by +2050bps to close at 33.3% w/w. This instrument is due to mature on 12 July ‘23.
• According to China’s Bureau of Statistics, China’s inflation flattened to 0% y/y in June ’23 vs 0.2% y/y recorded in May ’23. This marks the lowest headline inflation reading since a deflation was recorded in February ’21 and can be largely attributed to plunging consumer demand despite China’s reopening.
• The PBoC in its June ’23 meeting reduced its lending rates by -10bps. This marks the first interest rate adjustment (since August 2022). We note that rates have remained unchanged for the past eight months. According to the PBoC, this is targeted at stimulating economic activities, given that consumer spending continues to weaken. The 1-year and 5-year LPR currently stand at 3.55% and 4.20% respectively.