CBN Sells N355bn OMO bills to mop up Excess System Liquidity

Thursday, December 21, 2017 7:00PM / @ZedcrestCapital 

*** DMO lists $300m diaspora bonds, $3bn Eurobonds on NSE, FMDQ***

Bonds

We witnessed further compression in bond yields today, with demand especially focused on the 5-, 10– and 20-yr maturities which declined by 4bps, 19bps and 11bps respectively. Slight demand was also witnessed on the 2036 bond which declined by 1bp to 13.82%. Average bond yields consequently compressed by 5bps to 13.84%, as bids on all maturities fell below the 14% mark. We expect a slight decline in yields tomorrow, due to position taking by some market players in anticipation of increased demand opening next year.

 Treasury Bills

The T-bills market remained bearish in today’s session, following continued OMO interventions by the CBN. The CBN sold a total of N355bn OMO bills in a bid to mop up excess system liquidity coming from the OMO and PMA maturities today.  Average T-bill yields consequently rose by about 60bps as bids on most maturities rose to around 15% levels. We expect this trend to persist in the near term due to the continued OMO interventions by the CBN, and lack of significant client interest in T-bills at current levels.

Money Market

The OBB and OVN rates declined slightly to close today at 5.67% and 6.42%, as inflows from OMO and PMA T-bill maturities (N150bn) today, coupled with inflows from FAAC and Paris club payments in earlier sessions, helped to mitigate the effect of the significant OMO T-bill sale of c.N355bn by the CBN in today’s session. System liquidity is consequently estimated to close today at N65bn long, from a positive opening figure of N270bn. We expect rates to be relatively stable tomorrow, barring a further significant OMO sale by the CBN.

FX Market

The CBN Official spot rate remained stable at its previous day rate of N306.15/$. Rates at the Investors and exporters FX window depreciated by 0.11% to close at N361.31/$. Rates at the parallel market however remained stable at N363.50/$.

For more details email research@zedcrestcapital.com or call the dealing desk via 01-6311667
 

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