The dominant theme of the review week was the s liquidity tightening by the central bank typified by the issuance of OMO bills despite the waning interest from both domestic and offshore investors observed during the better part of the week and the inclusion of the 20years benchmark bond in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM).
In a relatively busy week for the domestic fixed income market, the bellwether activity of the review week was the announcement of the inclusion of the 20year FGN bond in the JP Morgan index. Other major developments include: 1) the release of July 2014 inflation figures (headline: 8.30%); 2) treasury bills auctions, and; 3) inflow of the monthly budgetary allocation (FAAC)
In line with our expectations, overall direction of the market during the review week was dictated by the maturity of c. N134.0billion worth of OMO bills the OMO bills auction, and the FGN primary market bond auction.
Financial markets are the embodiment of risk, and this makes it very hard for an individual investor to generate decent returns. Typically stock markets are high risk – high reward scenarios, where your money can either be doubled overnight or can all be lost. However, there is an alternative to stocks, debt instruments, such as bonds can be used to effectively act as a counter measure to stock market risk – this is not to say that these are any less volatile in short time frames, but since they typically move in opposite directions of the stock markets, they are a safe haven during times of market volatility.
The dominant theme during the week under review was the moderated interest from both domestic and foreign investors. This contributed significantly to the direction of activities whilst the net issuance of c.N38billion OMO bills equally influenced liquidity levels and overall market behavior.
Besides the treasury and OMO bills auction by the CBN, the major highlight of the review week was the meeting of the monetary policy committee (MPC), which significantly drove the direction of activities in the market and disbursement of budgetary allocations (FAAC) by the federal government.
FBN Holdings Plc announces that its largest subsidiary, First Bank of Nigeria Ltd. (FirstBank), has priced a US$450 million subordinated Tier 2 debt issuance in the international markets. The proceeds from the capital raising will be used by FirstBank f