Average Money Market Rate Fell By 10.72% To Settle At 10.22%

Tuesday, April 23, 2019 02:53 PM / Anchoria AM Research

Money Market

The money market rate decreased significantly last week as the Overnight rate (OVN) and Open Buy Back (OBB) dropped to 10.57% and 9.86% from 21.57% and 20.29% respectively. Consequently, the average money market rate fell by 10.72% to settle at 10.22% despite a decrease in the system liquidity to cN100bn from cN267bn in the previous week. During the week there was an absence of OMO auction. However, major outflow included: Weekly Wholesale, Invisible and SME FX auction of $210mn while major inflow included: OMO Maturities of cN106bn, Bond Coupon Payments of cN33bn. The decline in rate despite a fall in system liquidity, was due to the ability of banks to access funding via the CBN’s Standing Lending Facility (SLF).

We expect the rates to inch higher this week as Banks prepare for another round of CBN weekly FX auctions on Monday, biweekly retail FX auction on Friday and Bond auction on Wednesday.

Source: Anchoria AM Research, FMDQ OTC

Commodities

Brent Crude Oil and WTI Crude Oil rose by 0.59% and 0.73% to close at $71.97 per barrel and $64.00 per barrel respectively due to the declining inventories in US. Also, the Trump administration said it won’t renew waivers that let countries buy Iranian oil without facing U.S. sanctions, a move that shook energy markets and risked upsetting major importers such as China and India.

Fixed Income

Bond: FGN

Despite a relatively quiet week, the Bond Market closed on a bullish note last week with increased demand seen on most maturities especially 2023 (-26bps) and 2027 (-22bps) Bonds. Average yields fell by 9bps to close the week at 14.16%.

Week Ahead: Following a resumption from the Easter Break on Tuesday we expect the market to trade on a cautious note as investors prepare for April Bond Auction in which the Debt Management office (DMO) is expected to issue 5, 10- and 30-years bond worth N100 billion.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC

Treasury Bills

In the absence of OMO auction during the week and as market participants expect a reduction in spot rate in the next T-bills Primary Market Auction, the secondary treasury bills market closed on a bullish note. Consequently, the average yield fell by 11bps to close the week at 13.24%.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC

Anchoria Research: +234 908 720 6076;  research@anchoriaam.com

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