CBN sells c.N560bn T-bills to Moderate Excess Inflows from OMO T-bill Maturities


Thursday, May 31, 2018 / 07:00 PM / Zedcrest Capital

***CBN Manufacturing PMI Expands for 14th Consecutive Month***

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The Bond market traded on a relatively muted note, as traders wound up their activities for the month. We witnessed a slowdown in bullish sentiments from the previous session, with yields rising slightly higher by c.3bps on average. There was still slight demand around the medium tenured bucket (21s -24s), while traders took some profits on the longer end of the curve.  We expect a slight uptick in yields in the near term, due to waning client interests, especially on the longer tenured maturities.

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Treasury Bills

The T-bills Market traded on a relatively flat note, as significant inflows from OMO and FGN Bond maturities (c.N780bn) were relatively muted by a significant OMO sale (c.N560bn) to the market by the CBN. We expect yields to trend lower tomorrow as system liquidity remains significantly buoyant (up about N500bn), following a significant undersubscription of the OMO auction which had a total amount of N800bn on offer. Our lower yield expectation is however barring a further OMO sale by the CBN to make up for the residual offered amount.


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Money Market

The OBB and OVN rates rose slightly higher to 2.83% and 3.67%. This was following the OMO sale by the CBN to mop up the excess liquidity inflows into the system. Barring a further OMO sale by the CBN, we expect rates to remain moderated, as system liquidity remains significantly buoyant, with no significant funding pressures expected in the system tomorrow.


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FX Market

The Interbank rate remained stable at its previous rate of N305.95/$, even as the CBN’s external reserves maintained a steady decretion, down to $47.65bn as at May 28. The I&E FX rate appreciated significantly by 0.29% to N360.97/$ from a 10-Month high of N362.02/$ recorded in the previous session. Rates in the Cash market appreciated further by 70k to N361.80/$, while the transfer market rate remained stable at N366.00/$.


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The NGERIA Sovereigns remained downbeat in today’s session, with investors selling off mostly on the longer end (2027s - 2047s) which have dropped c.0.80pt, with yields rising higher by c.7bps on average.


The NGERIA Corps were however slightly bullish, with most interest witnessed on the Access 21s, FBNNL 21s and FIDBAN 22s. We however witnessed slight sell on the Zenith 22s which lost –0.05pt.


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