Interbank Rates Plunge as FX Retail Refund Impacts Positively on System Liquidity

Friday, March 13, 2020 / 7:38 AM / By Zedcrest Capital / Header Image Credit: The Tokenist

FGN Bonds

The Bonds Market maintained its bearish trend, as offers continued to improve across the bond curve. The significant drop, to already depressed crude oil prices fueled more sell-off by market players, especially on the mid-(2029s) to long-end (2049s) of the curve. Yields expanded by an average of c.76bps across the benchmark bond curve.  

We still expect a bearish market in tomorrow's session, as market players look for more selling opportunities to exit their positions.

Treasury Bills

The Treasury Bills market traded on a bearish note, with offers improving significantly across the OMO curve. Despite the CBN not floating an OMO auction, sell-interest still persisted, especially on long-end OMO maturities (Jan/Feb), as supply was unrelenting from Offshore Investors. Yields expanded by an average of c.47bps across the benchmark OMO curve. 

Contrastingly, The NTB side traded on a bullish note, especially on the newly issued 364-DTM at yesterday's T-bills PMA. Yields compressed by an average of c.49bps across the benchmark NTB curve.

We expect the bearish trend to persist in tomorrow's session, as Foreign Portfolio Investors continue to sell-off at the mid- to long-end of the OMO curve.

Money Market

Takers breathed a sigh of relief, as interbank rates plunged by c.900bps, bolstered by FX retail refund of c.N200bn impacting system liquidity. OBB and OVN rates closed significantly lower at 3.29% and 4.00% respectively.

We anticipate rates to spike in tomorrow's session, as FX retail Debit is expected to hits banks.

FX Market

At the Interbank, the Naira/USD spot and SMIS rate remained unchanged at N306.95/$ and N358.51/$. While at the I&E FX window, the Naira depreciated significantly against the Greenback by N5.67k to close at N374.00/$.

At the parallel market, cash and transfer rate depreciated significantly by N2 and N7 to close at N380.00/$ and N387.00/$ respectively.

Eurobond

The NGERIA Sovereign maintained its bearish course in today's session, as yields continued to expand across the sovereign yield curve. With oil prices plunging by c.8.66% D/D, yields weakened further as investors continued to exit their positions. Yields spiked by an average of c167bps across the benchmark sovereign curve.

The NGERIA Corps tickers traded on a mixed note, as yields on the ACCESS 2021s, ZENITH 2022s and FIDBAN 2022s, all dipped by c.1bps apiece, while SEPLLN 2023s spiked significantly by c.87bps among most tracked papers.

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