Money Market
This week, the interbank rate surged significantly as system liquidity decreased after the NTB auction settlement debit. Compared to the previous week, the Open Buy Back (OBB) rate rose by 342 bps, reaching 19.17%, while the Overnight rate (O/N) increased by 326 bps, ending the week at 19.58%.
We anticipate higher rates in the upcoming week as liquidity thins out further.
Treasury Bills
The Treasury Bills market started the week on a cautious mode as market positioned ahead of the NTB auction which held during the week.
At the auction, the DMO offered ₦104.35 billion across the 91-, 182-, and 364-day papers. Total subscription at the auction was 1.81 trillion, while about 604.255 billion was allotted to the market with stop rates at 9%, 13%, and 15.75% against previous levels of 8%, 12%, and 16.75% for the papers. Following this, improved demand was witnessed, particularly on the newly issued 1-year paper (5-Dec-24). There was notably increased demand for the newly issued 1-year paper (5-Dec-24). However, this demand dwindled by the week’s end due to low liquidity in the system, resulting in trades occurring around the 14% level, up from the previous 13%. Hence, the average benchmark yield rose by 28 bps, ending the week at 10.48%.
We anticipate a similar sentiment in the upcoming week in anticipation of the next NTB auction on Wednesday.
FGN Bond Market
The FGN Bonds market witnessed a bullish trend throughout the week, mainly driven by increased demand for the 53 papers. As a result, the average benchmark yield closed the week at 15.11%, reflecting a significant 78 bps decline on a week-over-week (WoW) basis.
We anticipate a sustained continuation of this prevailing trend in the upcoming week despite the FGN Bond auction slated for Monday.
Eurobond Market
Although a selloff ensued toward the week’s close following the release of higher-than-expected US NFP data, with figures reaching 199k compared to the anticipated 180k, FGN Eurobonds concluded the week on a bullish trajectory. This was chiefly propelled by the superior performance of the ISM Services PMI, ADP employment change metrics, and the announcement of the inaugural batch of oil from the Dangote refinery. Consequently, the average benchmark yield experienced a decline of 15 bps, settling at 10.37%.
We anticipate a cautious mode in the upcoming week as market anticipates the US CPI data and the FOMC meeting.
Currency Market
The value of the Naira to the dollar depreciated by 1,854 bps week-on-week to print at ₦1099.05/$ this week at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Equities Market
The local stock market closed higher this week, with the NGX All Share Index (NGXASI) gaining 12 bps in a day to reach 71,541.74 points, showing a 17 bps increase from the previous week. Increased interest in banking stocks, sparked by the Central Bank’s announcement to raise bank capital requirements, was the primary driver behind this week’s performance. Year-to-date growth stands at 38.66%, with the market capitalization growing by ₦0.07 trillion to ₦39.149 trillion by week’s end. Market breadth, indicating advancing stocks against decliners, closed at 1.48x, with 49 advancers surpassing 33 decliners.
In terms of trading, the total volume rose by 39.52% week-on-week, hitting 503.84 million units, while the total traded value decreased by 29.52% to ₦7.20 billion. Universal Insurance, United Bank for Africa, and Guaranty Trust Holding Company (GTCO) were the most traded stocks by volume, with 193.30 million units, 186.06 million units, and 163.96 million units, respectively. Meanwhile, Airtel Africa, GTCO, and Zenith Bank topped the value chart, closing at N7.41 billion, N6.47 billion, and N4.26 billion, respectively.
