Bond Market Reverses Prior Session Loss ahead of Auction


Tuesday, May 22, 2018 / 07:42 PM / Zedcrest Capital

*** CBN MPC maintains rates to ‘get more clarity’***

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The Bond market opened the week on a weaker note, with yields rising higher by c.14bps. This was following fears of continued selloff from offshore investors which pushed bid prices significantly lower, despite the relatively scanty volumes traded. We witnessed the most selloff on the 2027s and 2034s, which rose by as much as 7bps (-0.40pt). We expect yields to moderate slightly in the near term, with slight pullback in yields expected at these levels.

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NB: (1) The DMO reserves the right to alter the amount allotted in response to market conditions.  

(2) Additional sum of N14.985 Billion 13.53% FGN MAR 2025 & N14.985 Billion 13.98% FGN FEB            2028 will be allotted on non-competitive basis.

Treasury Bills

The T-bills market traded with mixed sentiments, opening on a slightly bullish note with some demand on the longer end of the curve. We however saw some selloff on the shorter end of the curve as some banks were looking to generate liquidity to fund their positions. Yields consequently compressed by c.7bps on average. We expect yields to trend slightly lower tomorrow, as market players anticipate inflows of c.N267bn from OMO maturities on Thursday.


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Money Market

The OBB and OVN rates rose slightly higher to 17% and 18%, despite the slight improvement in system liquidity to c.N81bn positive. This was as most banks were takers in the interbank market, consequently keeping the lending rate slightly above the benchmark SLF rate of 16%. We expect rates to moderate slightly in anticipation of inflows from OMO T-bill maturities on Thursday. Further liquidity expectations however remain tight due to expected outflows for Retail FX sales and bond auction debits for Friday.


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FX Market

The Interbank rate depreciated by 0.02% to N305.90/$. This was following a slight drop in the CBN’s FX reserves by c.$50m down to $47.75bn as the CBN maintained its interventions in the various market segments to ensure stability of the USD/Naira rates amid offshore selloff on assets. The NAFEX rate appreciated marginally by 0.02% to N361.41/$, with offshore demand for dollars still persistent in the market. Rates in the Cash market depreciated by 0.14% to N363.50/$, while the Transfer market remained stable at N365.00/$.


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The NGERIA Sovereigns showed slight recovery from the bearish sentiments witnessed in previous sessions, as investors sentiments turned moderately bullish across the curve. We witnessed the most interest on the 2032s and 2038s which gained +0.60pt and +0.80pt respectively.


Trading in the NGERIA corps were mixed, with most volumes on the SEPLLN 23s and the Zenith and UBANL 22s. While the SEPLLN 23s and UBANL 22s were mostly bearish, the Zenith 22s posted marginal gains of c.0.10pt.



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