Nigeria’s Bond market turned significantly bearish in today’s session, as yields spiked by c.35bps to a 3-week high of 13.01%, despite the very low volumes traded in the market. The strong bearish move was triggered by some profit taking by an offshore client on the 2037s, which consequently triggered some sell off on the 2036 and 2027 bonds as well. Very few trades were done outside of the three bonds, but bid prices were significantly depressed across the curve (-1pt average), as traders maintained a relatively risk off position. Fears of a continued sell off from offshore would force the markets to open next week on a cautious tone, in the absence of this however, we should expect some pullback in yields.

Treasury Bills
The T-bills market closed on a relatively quiet note, with yields inching slightly higher by c.12bps, following some sell on the shorter end of the curve. Flows in the market were mostly client driven, with the bulk of trades on the 3-Jan maturity. We expect the market to remain scantily traded on most maturities, as system liquidity is expected to tighten slightly ahead of expected inflows from OMO maturities and FX refunds later in the week.

Money Market
The OBB and OVN rates declined slightly by c.200bps to 2.83% and 3.33% respectively. This was as there were no significant funding pressures in the market. System liquidity is consequently estimated to close the week at c.N200bn positive. We expect rates to inch slightly higher on Monday, due to expected outflows for wholesale FX sales by the CBN.

FX Market

The Interbank rate appreciated strongly by 0.16% to N305.20/$, following continued accretion of the CBN’s external reserves by 1.54% to $47.58bn as at 3-May. The NAFEX rate however depreciated by 0.08% to N360.75/$, while rates in the Unofficial market remained stable at N361.50/$

Eurobonds

The NGERIA Sovereigns remained depressed, with investors still largely bearish across the curve which lost –0.50pt on average. The biggest sell offs were on the 2047s which lost –1.50pt even as its yield trended as high as 7.93%.

The NGERIA Corps remained bearish with selloffs witnessed across all traded tickers. The longer tenured bonds (22s&23s) were the most sold off, with investors mostly bearish on the UBANL and FIDBAN 22s, as yield on the later crossed the 10% mark (last trade at 9.93).

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