Wednesday, January 17, 2018/
11.50PM /Zedcrest Capital
*** Nigeria Central Bank Governor Expects Rates to Remain Unchanged***
*** DMO releases Q1 FGN Bond Calendar***
The bond market traded on a mixed note, with most of the activity focused on the 10 and 20-yr bonds following release of the January FGN bond offer circular. The Yield on the 2027 bond declined to 13.2% levels as some later buys offset initial sell witnessed on the bond following release of the offer circular. We also witnessed continued profit taking (still slight) on the 2037 bond at 13.21%. We expect the market to range at these levels (13.15 -13.45) following release of the Q1 FGN bond calendar, and expectations of a status quo MPC decision ahead of the bond auction scheduled for the 24th of January.
The T-bills market traded on a relatively quiet note, with continued demand however witnessed on the 19-Apr bill, due to anticipation of lower stop rates at the PMA. As predicted, we witnessed significant demand on the 1-yr bill with slight over subscriptions also witnessed on the 91 and 182-day bills. Stop rates at the auction consequently cleared at c.38bps lower than previous rates. We expect the market tempo to be slightly bullish tomorrow, with some client demand expected on the long end of the curve following huge amount of lost bids by local and offshore clients alike.
The OBB and OVN rates declined slightly to 6.17% and 6.50% as market players anticipate inflows from c.N96bn maturing OMO bills and C.N65bn 2034 bond coupon payment. We consequently expect rates to decline further tomorrow, barring a significant OMO T-bill sale by the CBN. We also note that expected funding for retail FX purchase by banks on Friday would result in a significant decline in system liquidity and consequently higher rates closing the week.
Related NewsBond yields record 67bps YTD decline on sustained offshore interests