Funding Rates Crash as CBN Refunds Banks for Lost FX Bids


Wednesday, March 28, 2018 /9:00 PM / Zedcrest Capital

*** Nigeria Disburses 647.4b Naira Revenue Earned in February***

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The bond market traded on a relatively mixed note, with the previous day’s bearish trend extending to the long end of the curve as local players sold off especially on the 27s & 34s. The short to medium end of the curve (19s - 26s) however recovered slightly from its bearish trend in the previous session. Yields consequently compressed by c.4bps on average. We expect the market to close the month on a relatively weak note, with yields expected to inch slightly higher on the long of the curve due to the relatively weak demand and profit taking momentum in the market.

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Treasury Bills

The T-bills market traded on a relatively quiet note, with some client interests observed on some short and medium tenured maturities (April/May and Oct/Nov). This came as the CBN did not conduct an OMO auction for the 3rd consecutive session of the week, while traders were also open to taking profits on some previously issued OMO bills at c.14.00% in anticipation of a resumption in OMO by the CBN. Yields consequently compressed by c.5bps across the curve. The much anticipated retail FX refunds came into the system well after market close and we expect this inflow to fuel some bullish sentiments in the market tomorrow, coupled with expected inflows from FAAC allocations to states and local governments.


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Money Market

The OBB and OVN rates crashed to 9.83% and 10.75% respectively, as inflows from retail FX refunds bolstered system liquidity significantly. We expect rates to crash further tomorrow, due to expected inflows from FAAC disbursements. This is however barring a significant OMO sale by the CBN.


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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 $46.04bn as of 26 March. The NAFEX rate appreciated by 0.06% to N360.03/$, with total volume traded rising by 36% to $387m. Rates in the Unofficial market however remained stable at N361.20/$.

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The NGERIA Sovereigns were relatively mixed, with investors slightly bullish on the 32s and 47s, while they sold off slightly on most other maturities. Yields stayed relatively flat, compressing just marginally by c.2bps (+0.06pt) on average.


The Nigerian banks were relatively quiet with just few trades mostly on the FBNNLs (20s &21s), ACCESS 21s Sub, and the Zenith, UBANL and FIDBAN 22s. Yields were however much unchanged from their previous levels on the traded tickers. The SEPLLN 23s traded at 99.55, down now by –0.25pt.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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