Weekly Economic And Financial Commentary – August 24, 2020
At last week’s bond auction, compared to offered amount of N150 billion, subscription totalled N241.8 billion. Despite the DMO only allotting N126.2 billion and N9.5 billion via non-competitive bids, the average stop rate increased for the first time since March 2020 at the auction by 11bps to 8.93%. At the OMO auction last week, the CBN offered N80 billion worth of bills compared to maturing instruments of N181.4 billion. Irrespective, the apex bank only allotted N72.5 billion worth of instruments, with average stop rate declining to 7.18% from 7.20% at the last auction. As a result, of the lower sales at the OMO auction relative to maturing instruments, money market rates declined at the end of the week to average 2.31% compared to average of 16.95% at the start of the week. In the secondary market, average fixed income yields rose 2bps WoW to 4.51% following sell pressure at the long end of the curve. Average bond yields rose 10bps WoW to 7.48%, while average NTB yields fell 3bps WoW to 1.54%. Elsewhere, average FGN Eurobond yields expanded by 31bps to 6.89%, following increases across the curve, with the largest expansion in the Jan-202 (+89bps), Nov-2027 (+32bps) and Feb-2032 (+28bps).
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