February 18, 2025/Coronation Research
Summary
- Market liquidity remained tight throughout the week, closing negative for the second consecutive week at -N3.10trn (14th February ’25), from -N315.94bn in the prior week. The Open Repo Rate (OPR) and Overnight Rate (O/N) closed higher at 32.45% and 32.80% respectively, as outflows from OMO sales outweighed inflows from coupon payments. We expect interbank rates to remain elevated amid the prevailing liquidity constraints and anticipated outflows from the scheduled T-bills auction.
- The secondary fixed-income market sustained its bullish trend last week across the market segments, We attribute this to investors’ expectations of a dip in the Inflation rate post the rebasing exercise as well as a potential shift in the monetary policy stance this week.
- In the T-bills segment, average yields declined by 45bps to close at 22.08% w/w.
- Average yields for OMO bills decreased by 67bps to close at 26.42% w/w. At the OMO primary auction last week, the CBN offered N600bn worth of instruments. We observed increased buying interest from investors, with total subscriptions reaching N1.92trn. Finally, the CBN allotted N1.39trn for the 355-day and 362-day tenors. The stop rates declined across the two tenors to settle at 21.33% and 21.45%.
- Trading activity in the FGN bond market was bullish across the benchmark curve, as average yields inched lower by 28bps to close at 20.25% w/w. The Mar 2028, Jan 2026, and Nov 2028 bonds witnessed strong buying interest, as average yields declined by 156bps, 110bps, and 104bps respectively.
- In the Eurobond market, trading activity closed positive with average yield declining by 24bps to 9.07%, buoyed by renewed investor interest in the Nov 2025 and Sep 2033.
For the full Coronation fixed income and exchange rate (CFEX) update, please click here
