Bond Market Reacts Positively to CBN Governor Tenure Renewal


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.



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
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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

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Source: CBN  

Benchmark Treasury Bills
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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

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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

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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.


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