(Greenwich Merchant Bank): In a four-day trading week to wrap up an eventful year to remember, activities in the Fixed Income market remained bearish from the prior week to settle the average yield across the market at 2.39% from 2.28% WoW.
Investors extended their profit booking from the Bond and OMO-bill market last week into the NT-bill market. Hence, we noticed a lot of offers across all maturities in the market for the week.
Major sell-offs were noticed at the belly of the NT-bill curve following the outcome of the Primary Market Auction (PMA) in the week. Thereby, the average yield in the NT-bill market spiked by 8bps to settle at 0.46% from 0.38%.
Similarly, the OMO-bill market told the same tale as investors offered a chunk of bills across the market with thinning bid-offer spread. Consequently, the average yield in the OMO-bill market spiked by 4bps to 0.58% from 0.54%.
In its scheduled Primary Market Auction (PMA), the CBN rolled over maturing NT-bills worth NGN74.8bn across the 91DTM at 0.0350% (prev. 0.0480%), 182DTM at 0.5000% (prev. 0.0500%) and 364DTM at 0.2100% (prev. 0.1390%) for the 364DTM.
Average bid-to-cover ratio recorded in the auction stood at 2.3x as investors scurried for the sparse bills offered with the expectation of a better stop rate than the previous PMA.
With the buoyed system liquidity, Money Market rates remained in single digits. Thus, the Overnight and Open Buy Back closed at 0.83% and 0.50% from 0.58% and 0.43% respectively in the prior week.
Investors continue to book profit in the Bond Market, we witnessed lots of offers across the market during the week as investors sold off positions in order to close their books on a high note as the year wraps up. Consequently, the average bond yield steeped northward by 21bps to 6.12% from 5.91% at the close of trading in the prior week.
In the FX market, the Naira closed the year on a blemish theme, weakening across both the Parallel market and the I&EW despite recent policy reforms by the Apex Bank to hasten supply from remittances.
In the Parallel market, the Naira closed at NGN470.00/USD from NGN465.00/USD in the prior week while the CBN sold USD in the I&EW at NGN410.00/USD, representing NGN16.00/USD or 3.90% higher than NGN394.00/USD in the corresponding period of the previous week.
Forging into the new year, we expect the market to remain lukewarm as investors strategize and seek market direction for the new year.