T-BILL Yields Spike by c.70bps Following Renewed Offshore Selloff

Friday, August 09, 2019 / 07:00 AM / By Zedcrest Capital / Header Image Credit: Nairabarter

The T-bills market traded on a significantly bearish note, as yields spiked by c.70bps, following renewed selloffs by offshore investors across the curve. Local market players also remained risk off following the renewed OMO issuance by the CBN in the previous session. Bid yields across most of the curve are now at the c.12.00% mark from c.11.50% in the previous session.

Below are highlights of trading activities in the fixed income and forex market today.

Bonds

The FGN Bond market traded on a relatively calm note, as there was no further OMO issuance by the CBN in the money market. Yields consequently compressed slightly on the short to mid end of the curve. We however continued to witness some selling interests push yields marginally higher on the longer duration bonds.

We expect yields to close the week on a relatively calm note, having been already significantly beaten in the week to date. This is however barring a renewed OMO issuance by the CBN which could elevate short term bond yields.

Treasury Bills

We experienced a bearish trend in the T-bills market today. 

We expect yields in the T-bills market to remain slightly pressured in the near term, due to continued selloffs by offshores and the relatively tighter system liquidity levels occasioned by the CBN’s continued FX interventions in the I&E market.

Money Market

Rates in the money market inched higher by c.4pct, despite the c.N109bn inflows from maturing OMO bills. This was majorly due to a decline in system liquidity from the continued FX interventions by the CBN. The OBB and OVN rates consequently ended the session at 11.43% and 12.57%, with system liquidity currently estimated at c.N60bn long.

We expect rates to remain at current double digit levels, due to the relatively tighter system liquidity levels.

Source: FMDQ, Zedcrest

FX Market

At the interbank, the Naira/USD rate remained unchanged at N360.90/$ (Spot) and N357.68/$ (SMIS). The NAFEX rate at the I&E window rose by 48k to a 6-month high of N363.31/$ due to continued profit taking on T-bills by offshore investors. At the parallel market, the cash and transfer rates remained stable at N357.50/$ and N362.00/$ respectively.

Source: CBN, FMDQ, REXEL BDC

Eurobonds

The NGERIA Sovereigns remained relatively stable, with slight price gains witnessed on the mid to long end of the curve.

The NGERIA Corps were relatively stable, but with slight sell interest still witnessed on the ETINL 24s (6.19/6.08).

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