Bond Yields Close bearish, as CBN Holds off on OMO


Friday, March 30, 2018 /11:30 AM/Zedcrest Capital

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The Bond market closed on a bearish note, with yields rising considerably higher by c.6bps across the curve. This came on the backdrop of weak appetite for bonds in the market and continued profit taking by some locals. We the expect market to open next month on a slightly stronger note, as yields are relatively attractive at their current levels. 

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Treasury Bills

The T-bills market traded  on a slightly bullish note, mostly driven by client flows, as traders were mostly quiet on the screens whilst  winding up for the month. The CBN did not conduct an OMO auction but however moderated System liquidity via a Retail FX SMIS to the banks who had to prefund their purchases. This consequently constrained buying pressures, with yields declining by just c.7bps on average. We expect the market to be relatively stable in the coming week, as market players largely expect a resumption in OMO and wholesale FX sales after the break.

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Money Market

The OBB and OVN rates declined to 7.17% and 8.08% from c.10% in the previous session. This came on the backdrop of significant inflows from  FAAC and OMO T-bill maturities  (c.N500bn) which were slightly moderated by outflows for Retail FX funding (c.N300bn est).  System Liquidity is however estimated to be robustly positive at c.N450bn positive. Rates are expected to open higher in the coming week, due to expected outflows for OMO and wholesale FX sales. 

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FX Market

The Interbank rate remained stable at its previous rate of N305.65/$, with the CBN’s external reserves recorded to have improved by 1.51% to $46.21bn as of 26 March. The NAFEX rate fell by 0.05% to N360.20/$, with total volume traded declining by 30% to $270m. Rates in the Unofficial market however remained stable at N361.20/$. 

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The NGERIA Sovereigns were largely bullish, with demand especially on the long end of the curve (27s—47s) which rose by as much as +1pt. Significant volumes were traded across the curve, especially on the 30s, 38s and 47s.


The Nigerian banks were relatively quiet. Except for slight sell witnessed on the FBNNL 21s and FIDBAN 22s, other tickers were relatively unchanged from their previous levels, with the GRTBNL 18s been the most traded ticker at 101.375. The SEPLLN 23s recovered slightly from its previous session low, now trading at 99.75.

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