Nigerian Financial Markets Report

Dear Esteemed Client:

In line with its debt issuance calendar, the Debt Management Office (DMO) earlier today conducted its November bond auction with the 5-Year (APRIL 2023), 10-Year (APRIL 2029) and 30-Year (APRIL 2049) tenors on offer. At the auction, a total of ₦150.00bn were on offer with subscription levels recorded at ₦252.35bn; implying a bid-to-cover ratio of 1.68x across the maturities. However, the DMO sold a total of ca ₦157.92bn at marginal rates of 12.00%, 12.93% and 13.39% respectively; 205bps, 130bps and 121bps lower than the October 2019 auction stop rates for the APRIL 2023, APRIL 2029 and APRIL 2049 maturities respectively. The outcome of today’s auction has further revealed the paucity of supply of fixed income securities and the much of funds tracking FGN risk free assets, in the absence of investible OMO bills, following the CBN’s recent policy restrictions on retail and non-banking intuitions.

In subsequent trading sessions, we anticipate bond yields to trend lower, especially as we expect investors who lost out at the auction to explore the secondary market window to fill their orders. On a broader scale, we are of the view that the current supply-demand dynamics would set the tone for sustained downward trend in yield in the near term. Read more

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