Robust system liquidity keeps money, fixed income markets order-driven

Naira remains stable despite flurry of social unrest in the country Analysts, investors speculate if liquidity pressure would stop rates below 100bps in upcoming NTB PMA Investors may stay on the side-line in anticipation of the Primary Market Auction this week Look forward to a mixed start in the secondary market as investors continue to scramble for bills

FX market:

At the close of the market last week, the Nigerian naira traded N463 to a dollar in the parallel market, decreasing by 0.22 per cent from N462 at the close of the previous week. The local currency remained stable at N386.00 per dollar at the I&E FX market despite the flurry of social unrest in the country. Most participants maintained bids between N383.00 and N394.00 per dollar. While the local currency traded at N379 to a dollar at the CBN official window.

Money market:

Similarly, there was a spike in the money market rates by an average of 838 basis points as the Central Bank funded the bi-weekly

FX retail auction. And by the close of the week, money market rates remained in single digits, albeit, trended higher as the Overnight (O/N) rate and Open Buy Back (OBB) rate closed at 9.8 per cent and 9.0 per cent from 2.0 per cent and 1.2 per cent respectively.

The NT-bill and OMObill markets closed the week bullish as investors continued to cherry-pick available bills across the curve. Average NT-bill yield plummeted to 0.4 per cent from 1.1 per cent, as well as average

OMO-bill yield, plunged to 0.5 per cent from 1.2 per cent at the close of the week.

Meanwhile, in its scheduled Primary Market Auction (PMA), investors expect that the bid-to-cover ratio in the auction will remain elevated whilst rates will trend lower across all maturities as witnessed in recent auctions in previous weeks. However, the CBN is expected to auction bills worth N134.4 billion of N154.4 billion maturing across the 91DTM (prev. 1.0%), 182DTM (prev. 1.0%) and 364DTM (prev. 2.0%).

Bonds Market:

Further afield, average bond yield plunged to 4.24 per cent from 5.0 per cent at the close of trading in the prior week. The bonds remain the market favourites as investors continue to cherry-pick maturities across the curve ignoring the modified duration. Albeit, a bit of profit-taking was seen at the close of the week on the 16.39 27-JAN2022 and 12.75 27-APR-2023 commercial papers.

Also, the DMO in its Primary Auction sold bonds worth N30.0 billion across the 12.50 per cent MAR 2035 and 9.80 per cent JUL 2045 maturities at a marginal rate of 5.0 per cent (prev. 8.5%) and 6.0 per cent (prev. 8.9%) respectively.