(Greenwich Merchant Bank): Bulls ushered in the new week in the NT-bills market, with the average yield contracting by 3bps to average 1.5%.
Although the market was bullish, trade was largely flattish especially on the short and long ends of the market. On Wednesday, the CBN will be rolling over maturing bills worth NGN128.2bn across the 91-day (NGN20.4bn), 182-day (NGN55.9bn), and 364-day (NGN52.0bn).
We expect investors to continue to demand higher stop rates in line with the recent trend. Also, system liquidity opened 66.6% lower at NGN69.4bn from NGN207.6bn on Friday.
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However, funding rates fell, with the Open Buy Back and Over Night rates at 15.0% and 15.3% respectively from 20.0% and 20.5%. We expect liquidity level to improve, given expected inflows from OMO bills (NGN476.4bn), and FGN Bond coupon payment of NGN49.9bn tomorrow.
Elsewhere, the OMO market was unchanged, keeping yields at 6.4% on average. Notably, selloffs at the short end of the market were muted by buying interests at the long segment. Bears in the Bonds market held sway, pushing yields higher by 13bps to average 9.5%.
Across the curve, the outcome was mixed as the long end traded bearish (+37bps), in contrast to a mildly bullish short end (-1bp), and a flat intermediate segment.
We anticipate that investors will remain bearish this week, although this momentum might weaken. In the Parallel FX market, the Naira weakened by NGN2.00/USD from NGN478.00/USD on Friday to NGN480.00/USD. At the I&EW, the Naira stabilized at NGN410.00/USD
