By Charles Ebi

FGN Bond market traded on a quiet note, with no significant trade consummated across the curve, according to market data. Thus, prices of FGN bonds were relatively flat, even as the average yield on the secondary market remained unchanged.
Specifically, 10-year, 15-year, 20-year, and 30-year FGN bond yields remained steady at 12.73%, 14.54%, 15.01%, and 15.47%, respectively, investment analysts said in separate market notes.
Analysts said they understand that the liquidity dilemma has kept local players on the sidelines. The financial system deficit expanded to ₦617.51 billion, as demand for short-term cover intensifies.
Notably, outflows worth ₦680.66 billion via the Standing Lending financing window (SLF) accounted for the drawdown recorded, according to TrustBanc Capital.
In context, the last time that the system saw this level of deficit was in May 2021, and the last five consecutive days of deficit was in November 2022, analysts said in a report.
Yesterday’s funding rates – Open repo and overnight lending rate – jumped by 175 basis points and 100 basis points to close at 18.5% and 19%, respectively.
Analysts said Nigerian treasury bills auction debit of ₦145.47 billion scheduled to hit the system tomorrow, will tighten the financial system liquidity condition further, while funding rates stay at market cap levels.
With the pocket of transactions, the average yield on FGN Bonds printed flat at 13.97%. On the contrary, the bullish party at the Eurobond secondary market was reinforced by strong bids across the benchmark curve, especially at the short spectrum.
As a result, the average benchmark yield cleared 52 basis points lower to close at 12.91%. Elsewhere, the 10-year US Treasury yield climbed to 3.55%.
Yesterday, trading activities in the secondary market for Nigerian Treasury bills were muted as market players took their bids to the Primary Market Auction.
At the auction, subscription levels came in weak on the 91-day and 182-day bills as expected, while the 364-day bill was oversubscribed at 1.2x.
As a result, stop rates across all tenors jumped significantly. The 91-day and 184-day stop rates improved by 345 basis points and 300 basis points, while the 364-day paper saw the sharpest jump of 525 basis points to close at 14.74%.
The OMO secondary market saw mild buy-side activities on the May-23 bill. As a result, the average yield dipped by 1bp to 4.01.