Bullllish sentiments commenced the quarter on the back of the c.N605bn bond maturity in January. Significant coupon payments through the quarter sustained the bullish run as participants looked to re-invest their excess funds with interests seen majorly on the short to mid end of the bond curve. Yields across board dipped through the quarter by an average of c.108bps.

Q1 was largely bullish in the Treasury bills space, albeit a bit of resistance was seen in the secondary market as the long end started trading sub 4% levels. Despite the declining stop rates at the NTB auctions, the auctions were heavily subscribed (average of 4.00 subscription ratio) save for the last auction. The Special Bills remained bid for most of the quarter as players sought better yields in the secondary market with the April/May maturities enjoying the most activity.

The limited supply amid significant liquidity drove a bullish bias in the OMO space through the quarter. This bias reflected in the OMO auction even though the CBN continued to offer lower than maturities for every week with no change in stop rates through the quarter.

The SSA Eurobond market commenced the first quarter of the year with mild bullish sentiments on the back of reduced omicron fears and increasing oil price. This trend was quickly reversed as driven by 3 major factors:

The plan of the US Fed, led by Chairman Jerome Powell to hike rates aggressively this year led to the selloff of the papers of emerging markets including sub-Saharan African economies.

The release of the US’ consumer price index data for December 2021, January and February 2022 at 7.00%, 7.50% and 7.90%, respectively – all record highs, also drove bearish sentiment in the SSA Eurobond market.

As events on the Eastern Europe front continued to escalate during the quarter, global risk-off sentiment was triggered, leading to the selloffs of risky asset, including the Eurobond papers of the SSA market.

Despite these three major factors, brief periods of respite, albeit momentarily, were recorded during the quarter where investors pick up attractive offers in the space. This was driven by the rally of crude oil prices, from the year opening at c.$80/b and reaching an intra-day high of $139/b.

The debt management office of Nigeria tapped into the international market to raise $1.25billion on a 7-year paper at a yield of 8.375%. This contributed to a downward repricing of the Nigerian sovereigns during the quarter.

The Ghana curve opened the year with a downgrade of the country’s credit rating, which led to a downward repricing of the Ghana papers. This was followed by series of events to improve Ghana’s fiscal position, in order to restore investor confidence.

Kenya inflation hits a 16-month low at 5.10%, which is well within the 2.5 – 7.5% target set by the central bank. This demonstrates the resilience of the largest East Africa economy amid external pressures like import costs and the surge in prices driven by the Russia-Ukraine crisis.

Zambia, on track to complete its $1.4bn IMF bailout in the second quarter of 2022, recorded a 2-year low inflation rate at 13.1%, as the monetary authority projects inflation rate to settle within 6% and 8% within the next eight quarters.

In Q2 2022...