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Thursday, May 09, 2019 / 07:00PM / Zedcrest Capital
Earlier today, the Nigerian Senate President, Bukola Saraki read a letter from President Muhammadu Buhari confirming the reappointment of Godwin Emefiele as the Governor of the Central Bank for a second term. Markets reacted to this announcement especially the bond market as it closed bullish.
Below are highlights from activities within the Fixed
Income and FX market today.
Bonds
The
Bond market turned firmly bullish in today’s session as market players viewed
positively the news of the re-appointment of the CBN governor for another five
year term. Expectations for a further decline in OMO stop rates also supported
a further decline in yields, which fell by c.9bps on the day. We witnessed the
most interest on the 2021s, 2028s and 2037s, with yields breaking the below the
14.50% mark to trade as low as c.14.30%.
We
expect demand interests to persist in the near term with expectations for
further moderation in short term OMO rates.
Benchmark FGN Bonds
Source: Zedcrest Dealing Desk
Treasury Bills
The
T-bills market remained slightly bullish due to the buoyant system liquidity
levels in the money market. Demand interests were mostly focused on the longer
end of the curve, as market players anticipated a further moderation in OMO
stop rates.
The OMO auction remained oversubscribed, with average bid to cover ratio at 2.01. The CBN consequently cut the stop rates by 7bps across all tenors offered, resulting in a total sale of c.N144bn, mostly skewed to the 336-day bill (N112bn).
We expect the market to remain slightly bullish tomorrow as market players look to fill lost out bids on the longer tenured offering.
OMO Auction Result
Source: CBN
Source: Zedcrest Dealing Desk
Money Market
The
OBB and OVN rates declined further by c.1pct as system liquidity remained significantly
robust due to inflows from OMO maturities and retail FX refunds, which more
than offset the OMO auction sale of c.N144bn, with system liquidity now
estimated at c.N470bn.
We
expect rates to trend slightly higher tomorrow, as market players fund for the
bi-weekly retail FX auction by the CBN.
Money Market Rates
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N307.00/$
(spot) and N356.60/$ (SMIS). The NAFEX closing rate in the I&E window
however declined slightly by 0.03% to N361.09/$, as market turnover improved by
78% to $215m. At the parallel market, the cash rate and transfer rate remained
unchanged at N359.00/$ and N363.50/$ respectively.
FX Market
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained slightly bearish with yields
closing higher by c.7bos on the day. We witnessed the most selloff on the 32s and
47s which lost c.1pct on the day.
The NGERIA Corps were relatively muted, except for some profit
taking witnessed on the UBANL and FIDBAN 22s.
Related News
1. NSE Lists
NSP-SPV Powercorp Green Infrastructure Bonds
2. Fixed Income
Monthly Update April 2019 - Is This A Good Time To Test the Eurobond Waters?
3. Average T-Bills
Yield Closes Flat at 13.1%
4. May 2019 FGN
Savings Bonds Offer for Subscription
5. Money Market
Rate Fell Significantly As The OVN and OBB Fell To 5.93% and 5.29%
6. Demand For Long
Term Bonds Pressure Yields Marginally Lower
7. Debut 30-Year
FGN Bond Oversubscribed At April Auction
8. CBN to Auction
c.N110bn T-Bills upon Resumption from Break
9. Average Money
Market Rate Rose By 6.65% To Settle At 16.86%
10. Average Yield
Contracts to 13.1% Amidst Buying Interests; PMA Holds on Thursday
11. Summary of April
2019 FGN Bond Auction Results
12. Average Yield
Moderates to 13.3% on Absence of OMO Auctions
13. Average Money
Market Rate Fell By 10.72% To Settle At 10.22%
14. Invest in FGN
Monthly Bond Auction – April 2019
15. Ecobank Launches
New 5-Year Eurobond at 9.75% Re-Offer
16. Outlook For
Yields On FGN Bonds Remain Relatively Stable With Renewed Buying Interests On
Maturities
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