Nume Ekeghe
Trading activity in Nigeria’s fixed-income market weakened in October, with total traded face value declining by 37.1 per cent to N25.81 trillion from N41.07 trillion recorded in September, as transactions across Treasury bills, Federal Government bonds, Open Market Operations (OMO) bills and Sukuk moderated.
Data from the Fixed Income Dashboard showed that the number of trades also fell by 30.6 per cent to 8,090 in October, compared with 11,652 in the preceding month, reflecting a broad-based slowdown in market activity.
The decline, analysts believe, was largely driven by reduced transactions in OMO bills, which remained the dominant instrument in the fixed-income market but recorded a significant contraction in turnover.
OMO bills accounted for N16.75 trillion in traded face value in October, down 40.3 per cent from N28.05 trillion recorded in September. The number of transactions in the instrument also declined to 3,602 from 5,485.
Despite the decline, OMO bills accounted for approximately 64.9 per cent of total fixed-income turnover in October, compared with 68.3 per cent in September, underscoring their continued dominance in the market.
Treasury bills also recorded weaker activity, with traded face value falling by 34.8 per cent to N3.91 trillion in October from N5.99 trillion in September.
The number of Treasury bills transactions declined to 1,435 from 2,227, while the number of participants remained unchanged at 26.
Similarly, trading in Federal Government of Nigeria (FGN) bonds moderated during the review period. Their traded face value declined by 26.9 per cent to N5.09 trillion in October from N6.96 trillion in September.
The number of transactions fell to 3,020 from 3,889, while market participation declined slightly to 24 from 25 participants.
Sukuk recorded the smallest decline in traded value among the four instruments, although activity also weakened. Its traded face value fell by 12.4 per cent to N58.53 billion in October from N66.79 billion in September.
The number of Sukuk transactions declined to 33 from 51, while participation remained unchanged at seven.
Overall, the total number of market participants declined slightly to 29 in October from 30 in September. OMO Bills participants fell to 28 from 30, while participation in Treasury bills remained at 26. The dashboard also showed a moderation in OMO bill yields between the two months. The closing yield on OMO bills declined to 19.04 per cent in October from 20.15 per cent in September, while the weighted average yield fell to 18.71 per cent from 20.04 per cent.
The October dashboard also showed varying yields across the FGN bond tenor spectrum, with closing yields generally ranging between 16.00 per cent and 17.00 per cent.
The combined September and October dashboard showed that fixed-income transactions over the two-month period amounted to N66.88 trillion, comprising 19,742 trades across the four instrument categories.
OMO bills accounted for the largest share, with N44.80 trillion in traded face value and 9,087 transactions. FGN bonds followed with N12.05 trillion and 6,909 trades, while Treasury bills recorded N9.90 trillion and 3,662 transactions. Sukuk accounted for N125.32 billion across 84 trades.