Wednesday February 29, 2018/9.30pm/Zedcrest Capital
***Nigeria’s Inflation Drops for Twelfth Consecutive Month*** - NBS
The bond market traded on a relatively flat note with very little volumes traded on some maturities. We witnessed slight interests on the 10 and 20-yr, but they were offset by some sell on the 2026 bond. This came on the backdrop of a weaker than expected inflation result, however positive. Yields consequently stayed flat on average. We expect the market to be relatively client driven in the near term, even as we expect a slight uptick in yields, owing to weak client demand observed in recent sessions.
The T-bills market traded on a slightly bullish note, as system liquidity improved significantly following inflows from retail refunds in the previous session. Market players also cherry-picked some high yielding bills, in anticipation of OMO maturity inflows tomorrow. Yields however compressed marginally by 4bps on average, as market players remain wary of further liquidity tightening measures by the CBN. We expect yields to trade on a relatively flat note tomorrow, as market players anticipate provisions for their retail FX bids on Friday.
The NTB auction conducted today by the CBN was moderately subscribed at 1.3X bid to cover, as most offshore clients stayed on the sidelines unlike in previous sessions, where we witnessed significant offshore interests. We consequently did not witness any change in stop rates from the previous auction, except for the 91-day which cleared 5bps lower.
The OBB and OVN rates crashed to 8.67% and 9.00% respectively, as system liquidity was bolstered by inflows from retail refunds in the previous session. System liquidity is consequently estimated to close at c.N260bn positive. We expect rates to be relatively stable tomorrow, as market players anticipate inflows from OMO maturities worth N90bn. This is however barring a significant OMO sale by the CBN.
The CBN Official spot rate remained stable at its previous day rate of N305.90/$, with external reserves recorded to have improved by 1.73% to $41.09bn as at 8th of February, 2018.
The spot rate in the Investors and Exporters’ FX Window depreciated by 0.04% to close at N360.37/$ from N360.22/$ in the previous session.
Rates in the Unofficial market remained stable at N361.40/$.