December 17, 2024/Coronation Research

Summary

• Opening market liquidity stood at a negative position of N1.50trn (13 Dec ’24), driven by a large sale of T-bills and OMO issuances during the week. Call, overnight and repo rates closed within a range of 6.88% – 32.92%, indicating a tight liquidity condition. Our expectation is that money market rates are likely to remain tight, driven by liquidity constraints and additional outflows from the scheduled bond auction.
• In the secondary market for T-bills, average yield increased by 43bps to 25.70% pa.  At the primary market T-bills auction held last week, the CBN offered N275.71bn, but allotted N527.84bn worth of T-bills to market participants. The stop rates for 91-day and 182-day tenors remained unchanged at 18.00% and 18.50% respectively. Meanwhile, the stop rate for the 364-day tenor declined by 13bps to 22.80% (previously 22.93%), implying a yield of 29.53%In the secondary market for T-bills, the average yield increased by 43bps to 25.70% pa.  At the primary market T-bills auction held last week, the CBN offered N275.71bn, but allotted N527.84bn worth of T-bills to market participants. The stop rates for 91-day and 182-day tenors remained unchanged at 18.00% and 18.50% respectively. Meanwhile, the stop rate for the 364-day tenor declined by 13bps to 22.80% (previously 22.93%), implying a yield of 29.53%.
• Meanwhile, the average yield for OMO bills moderated by 9bps to 27.23% pa. At the OMO auction last week the CBN offered the sum of N600.00bn, but allotted N1.56trn worth of 351-day and 365-day OMO bills, with stop rates at 23.95% and 23.98% respectively, implying 31.49% and 31.54% yields.
• Trading activity in the FGN Bond market was bearish, as the average yield rose by 4bps across the curve, reaching 19.53% pa. This upward movement was driven by sell offs at the medium and long ends of the curve, where average yields rose to 19.82% and 17.73%, respectively. Meanwhile, the short end of the curve saw a marginal decline in average yield by 1bp, to close at 20.35%.
• In the Eurobond market, average yield added 18bps to close at 9.36% from 9.18% last week.

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