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Money and Fixed Income

Market appetite for fixed income securities remains weakened



Expect sustained double-digit rate this week as CBN set for CRR debits – Experts

Market appetite for fixed income securities remains weakened


FGN Bond

The FGN bond space market appetite for bonds dampened on Saturday compared to Friday, ending the week on a rather drab note, Analysts at Zedcrest have noted.

While rates continue to improve across the curve, market participants remained on the side-lines, cherry-pick on few bonds, particularly the long-dated bond.

“We saw a few trades print on the 50s maturities at the 7.50 per cent levels. Despite the less active market, yields compressed by an average of 5 basis points across the curve.

“We expect the market for bonds to remain to dampen next week, as market participants continue to cherry-pick on selected bonds offered at an attractive level,” they said is a report.

Treasury Bills

The T-bills market stayed in-active, for a third consecutive session, despite a buoyant liquidly market.

“We observed slight demands mid-dated NTBs, which ended the day trading with 0.25 per cent-0.30 per cent levels.

“On the contrary, the longer-dated OMO bill (14/Dec maturity) saw no joy in today’s market, which started the offered around 0.90 per cent but jumped almost 60 basis points to close on the offer at 1.40 per cent,” the report further read.

Despite this attractive offer, the market seems to be less interested in trading this maturity. By and large, the NTB and OMO bills curve stayed unchanged day on day.

The analysts also projected that for next week, market activities might increase slightly, supported by a buoyant market as banks cherry-pick on OMO/NTB bills offered at an attractive level.

Money Markets

Money market rates jumped by an average of 338 basis points slightly by 66 basis points.

This was as expected because, despite buoyant system liquidity opening of N857.19, the outflows from bond auction funding and FX Retail hit the system the same day, causing it to drop aggressively. Consequently, OBB and OVN rate to close the day at 4.50 per cent, singly.
“We expect these slightly increased rates to drop during next week’s market sessions as there is no significant outflow hitting the system next week,” the analysts said.

FX Market

In the foreign exchange segment of the market, rates remained relatively stable, as supply level remained low for most of the trading session, causing no change in closing rates at the ‘official’ trading segments.

Consequently, all other market segments remained unchanged, with the cash and transfer market closing the day at N475/$ and N490/$, respectively.

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