Money Markets

System liquidity began on a strong note; however, debits due to the FGN bond (c.₦346 billion) and NTB auctions (Net withdrawal around ₦83.04 billion), along with the settlement of the CBN’s FX intervention, reduced liquidity in the system, resulting in a deficit of roughly ₦321 billion at the end of the week. Consequently, the Overnight Policy Rate rose by 6.10% to 32.19%, while the Overnight Rate increased by 5.93% to 32.81% compared to the prior week.

Outlook:  Short-term interbank rates are expected to stay high as we await FAAC credits. The recent FAAC meeting approved ₦1.41 trillion for distribution, with around ₦667 billion anticipated to enter the system.

Treasury Bills

The Treasury bills market started off calmly but with bearish sentiment, as investors focused mainly on the NTB auction, which offered around ₦610 billion in 91, 182, and 364-day papers. The stop rates for the 91 and 182-day papers remained unchanged at 18.00% and 18.50%, respectively, while the rate for the 364-day paper increased by 50 bps to 23.50%. Following the auction, there was notable buying interest in the newly issued 1-year paper, with trades occurring between 22.70% and 22.90%. Overall, the average mid-rate for benchmark NTB papers rose by 83 bps w/w, closing the week at 22.79%.

Outlook: We expect to see continued interest in the newly issued 1-year paper, albeit with caution, as participants will focus on the final MPC meeting for the year.

FGN Bonds

The local bond market started off quietly as attention shifted to the FGN bond auction. At the auction, the DMO successfully sold ₦346 billion compared to the ₦120 billion offered, with total subscriptions exceeding ₦360 billion. The 5-year (April 2029) and 7-year (February 2031) bonds settled at higher rates of 21.00% (+25bps) and 22.00% (+26bps) respectively. Post-auction activity was mixed to slightly bullish, with most trades focused on the February 2031 bond. Overall, the average mid-yield for benchmark bonds rose by 42 bps w/w, settling at 19.49%.

Outlook: We anticipate a tranquil beginning to the week as the focus shifts to the MPC meeting.

Eurobonds

The Eurobonds market concluded the week on a slightly negative trend, following a week characterized by mixed market sentiments influenced by the conflict between Ukraine and Russia, fluctuations in oil prices, and jobless claims data. Oil-producing countries like Nigeria and Angola, along with Egypt, experienced some price movements, although Egypt ended the week on a relatively positive note. Overall, the average mid-yield for Nigerian bonds decreased slightly by 2bps to 9.60%.

In other developments, Ivory Coast’s 2025 budget draft shows a commitment to fiscal discipline, aiming for a 3% GDP deficit reduction. Meanwhile, Kenya secured a $200 million funding boost from the African Development Bank to support its development initiatives.

Outlook: We anticipate some volatility in the Nigerian curve following the Senate’s approval for the country to borrow $2.2 billion from the debt market.

Nigerian Equities

Bullish sentiments kept the All-Share Index positive until Thursday. Buying interest in WAPCO, DANGSUGAR, MTNN, ZENITHBANK, FIDELITYBK, and UNILEVER offset selloffs in FBNH, ACCESSCORP, GTCO, STANBIC, UBA, PRESCO, and TRANSCORP, resulting in an 11bps w/w return (ASI: 97,829.02 points; Market Cap: 59.29 trillion). WAPCO, UNILEVER, and EUNISELL hit new highs, with EUNISELL returning 502.2% YTD. DANGSUGAR rose steadily from Wednesday to Friday. HMCALL listed 3.12 billion shares at ₦3.84. ARADEL was marked down for an ₦8.00 dividend. WAPCO reached a 52-week high at ₦61.20, settling at ₦54.00, and UNILEVER hit ₦29.60.

Outlook: We expect the mixed sentiment to persist next week.

Foreign Exchange

The market showed good liquidity this week as the CBN sold about $55 million. However, persistent demand for foreign exchange kept the market competitive, leading suppliers to seek higher selling prices. Consequently, the Naira slightly depreciated by 2 bps against the USD, closing at $/₦1,652.62.

Outlook: We expect the volatility to persist next week.

Commodities

Oil prices remained stable, heading toward a 5% increase for the week due to the escalation of the Ukraine conflict and anticipated higher Chinese imports in November. Brent crude is roughly $74.94 per barrel, while WTI is approximately $70.98. Similarly, gold prices exceeded the $2,700 mark for the first time in a fortnight, poised for their most significant weekly increase in over a year as safe-haven demand surpassed dollar strength and lowered expectations for a U.S. rate cut next month. At present, gold is trading at about $2,707.40 per ounce.

Outlook: We anticipate that the volatility will continue into next week.