CBN releases No-Sale OMO Result, as Finance Minister Announces Prospective $2.5bn Eurobond Issuance

Wednesday, February 7, 2018, 10.00PM/Zedcrest Capital

***Nigeria to redeem 762.5 bln naira T. bill with planned Eurobond sale***

Bonds

The bond market remained slightly bearish, with significant sell witnessed on the 2020 bond which rose by c.52bps to 14.44%. Yields however moderated slightly downwards by c.5bps, with some buy interests observed on the 2037s, while market players also normalized their bid - ask spreads, as they adjusted to the sharp downward trend witnessed in the previous session. We expect yields to trend downward tomorrow, as market players react to news of an expected T-bill refinancing announced today by the Finance Minister.

Treasury Bills

The T-bills market was slightly bearish as market players sold off some of their bills especially on the short end in a bid to generate liquidity for their positions. The CBN did not sell any OMO bill in today’s session, as market players came with very scanty bids (total of c.N9bn), following  the tight system liquidity and consequent high funding rates in the market. We expect yields to trend downwards tomorrow following news of an expected Eurobond issuance for refinancing of maturing T-bills worth N762.5bn.

Money Market

The OBB and OVN rates trended upwards to 53.00% and 53.08%, following the continued funding pressures witnessed by banks in the market. System liquidity is estimated to close relatively unchanged from its opening levels at c.N10bn positive, as there were no significant outflows from the system. We expect rates to moderate slightly downwards tomorrow, barring a significant OMO sale by the CBN.

FX Market

The CBN Official spot rate depreciated by 0.02% to N305.85/$ from its previous day rate of N305.80/$. The CBN’s external reserves is however recorded to have improved by 1.74% to $40.92bn as at 6^th of February, 2018.

The spot rate in the Investors and Exporters’ FX Window appreciated by 0.03% to close at N360.21/$ from N360.31/$ in the previous session.

Rates in the Unofficial market remained stable at N361.60/$

Related News

1.       FGN Savings Bond February 2018 Offer

2.       Funding Pressures Push Lending Rates above 30%, amid Continued Sell off on Bonds

3.       Bond Yields Rise on Weak Local Demand and Slight Offshore Sell

4.       DMO issues 2 and 3 year Savings Bonds at 10.277% and 11.277% respectively

5.       Nigeria’s Re-Inclusion to the JP Morgan Index, How Feasible?

6.       CBN sells N215bn OMO T-bills to Mop up Excess Liquidity Inflows

7.       CBN sells N253bn T-bills at c.10bps lower than previous Auction Rate

8.       FGN Domestic Debt Service Payment Increased In Line With The Stock of Domestic Debt

9.       Naira Depreciates slightly despite $210m FX intervention by the CBN