Over the past few months, average Fixed Income yield has dropped significantly (down by 278bps in the T-bills space and 134bps in the bonds space). 
Some of the factors that have contributed to this decline include; lower inflation, an excision of the 20-year bond maturity from bond auctions for the fourth quarter of 2017, absence of long-tenured bills in OMO auctions, lower marginal rate offerings at PMAS and the move by fiscal authorities to leverage lower interest rate environment in the international debt market to refinance some portion of federal government’s local debt obligations.
In view of the above, we note that yields in the fixed income market will sustain recent retracement for the rest of the year due for a number of reasons.
In view of the above, we note that yields in the fixed income market will sustain recent retracement for the rest of the year due for a number of reasons.
The successful sale of the $3 billion Eurobond has spurred external reserves to near $40 billion and a positive outlook for oil suggests sustained stability in the FX market, as well as improving fiscal position.
Further, CBN’s forward guidance on more accommodative policy environment in 2018 continues to influence market expectations of lower rates.
The above factors held unchanged, faster moderation in headline inflation anticipated in Q1-18 should trigger 100bps rate cut in Q1-18, resulting in a softer yield environment early in the year.
The above factors held unchanged, faster moderation in headline inflation anticipated in Q1-18 should trigger 100bps rate cut in Q1-18, resulting in a softer yield environment early in the year.
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