During the review week, the fixed income market was largely characterized by sustained bearish sentiments as investors’ remained skeptical due to weak economic indices, that is, continuous decline in oil prices and Naira depreciation, which have reduced the attractiveness of the Nigerian investment space. This, alongside issuance of treasury bills and statutory allocation from FAAC influenced market behavior, albeit marginally.
The activity of the week under review was influenced by 1) the November 2014 FGN bond primary market auction held by the Debt Management Office (DMO); 2) the release of October inflation figures (headline: 8.10%); 3) issuance and maturity of OMO bills– which influenced liquidity levels and also affected market behavior
The Federal Government of Nigeria (FGN) through the Debt Management Office (DMO) will be conducting a bond auction on Wednesday 12th November, 2014 at the primary bond market. Three major instruments (FGN 3-year, 10-year and 20-year bonds) are to be auctioned as scheduled for a total amount of NGN65bn and are all re-openings.
Overall market direction during the review week was dictated by: 1) the treasury & OMO bills auctions; 2) the release of the November 2014 FGN bonds auction offer circular by the DMO; 3) the circular released by the CBN Re: Guidelines on Accessing the CBN Standing Deposit Facility (SDF); and 4) treasury and OMO bills redemption.
The activity of the week under review was influenced by 1) issuance and maturity of OMO bills; 2) the redemption of AMCON bonds; 3) statutory allocation from FAAC – which influenced liquidity levels, to some extent, dictated market direction.
At the treasury bills auction, N34.89billion, N30.00billion and N31.39billion worth of 91day, 182day and 364day were offered whilst N59.88billion, N45.00billion and N66.39billion were sold at marginal rates of 9.80%, 10.20% and 11.25%, against 9.95%, 10.30% and 10.79% at the last auction respectively. Total subscription during the auction stood at N182.27billion, which was 189.32% and 106.42% of total amount offered and sold respectively. In our opinion, the high subscription level at the auction is indicative of renewed domestic investors� interest and relatively high system liquidity on the back of the treasury and OMO bills estimated at c.N96.27billion and c.N176.97billion respectively that matured during the week.
The activity of the week under review was influenced by 1) the October 2014 FGN bond primary market auction as held by the Debt Management Office (DMO); 2) the release of September inflation figures (headline: 8.30%); 3) issuance and maturity of OMO bills auctions bills – which influenced liquidity levels, significantly affected market behavior.