Bond Yields hit Two-year low, as DMO releases Q2 Calendar


Wednesday, April 18, 2018 /05:35PM / Zedcrest Capital

***Nigeria’s inflation will remain double digits in 2018*** - IMF

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The Bond market remained significantly bullish with yields compressing significantly by another 20bps, consequently capping a c.70bps decline in yields for the third consecutive session since the last OMO auction, Thursday by the CBN. We witnessed most volumes on the 27s and 37s, which hit their December 2017 lows at 13.09% before retracing slightly to c.13.15%. Average bond yields are currently at a two-year low (c.12.85%), levels last seen in Apr-2016 when the MPR was still at 12.00%. We expect a slight moderation in these intense bullish sentiments following release of the Q2 FGN Bond calendar and April 2018 bond offer circular, with N30bn each of a 5, 7 and 10-yr bond on offer.

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Treasury Bills

The T-bills market traded on a calmer note as market players relaxed their aggressive bullish stance from the previous session in anticipation of tomorrow’s PMA and a resumption in OMO on Thursday. We expect the market to remain relatively calm tomorrow, as market players are now trading cautiously in anticipation of the much likely OMO auction. The CBN plans to rollover N6bn, N29bn and N23bn of the 91-, 182 and 364-day bills at its PMA tomorrow.


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Money Market

The OBB and OVN rates remained stable, closing 2.08% and 2.63%, as the system remained awash with liquidity at c.N470bn positive. We expect rates to remain stable ahead of the OMO auction expected on Thursday.


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FX Market

The Interbank rate remained stable at its previous rate of N305.60/$, with the CBN external reserves recorded to have improved by 1.53% to $47.00bn as at 16-April. The NAFEX rate depreciated by 0.11% to N360.47/$. Rates in the Unofficial market also depreciated by 0.06% to N361.20/$.


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The NGERIA Sovereigns remained relatively quiet, but with a slightly bearish bias, with exception of the NGERIA 18s which has witnessed slight buy interests in recent session. Prices consequently dropped by –0.10pt on average. 


Investors were very active in the Nigerian Corporate Space, with significant volumes traded across all tickers except for the ECOTRA 21s. The ZENITH 22s and DIAMBK 19s were the outperformers amongst the banks, with gains of +0.15pt. The SEPLLN 23s were also lifted significantly higher by +0.50pt from their previous levels, with last trades around 100.90, now trading 100.75/101.25.


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