1-YR CBN OMO Bill Oversubscribed by 390%, Clears 15bps Lower

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Friday, July 05, 2019    /  08:00AM  /  Zedcrest Capital

 

The CBN recently floated an OMO auction in a bid to mop up the excess system liquidity levels, but eventually sold only a total of c.N264bn of the N887bn subscribed at the auction. This reflects an oversubscription by 390%, while the bonds and treasury bills market to remain bullish. 

Below are main highlights from activities in the fixed income and forex market on July 04, 2019

 

Bonds

Bond yields retraced marginally in today’s session, following a slight breather to the intense demand pressures which followed the bond repayment earlier this week. We however witnessed sustained demand interests around the short to mid end of the curve, with offers still relatively depressed on those tenors. 

We expect the bond market to remain bullish in the medium term, due to the continued moderation in OMO rates by the CBN and the large coupon payments expected later this month.


Benchmark FGN Bonds

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Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market remained bullish, with yields declining by c.11bps on the back of the significantly robust system liquidity levels. Rates on the 112 and 266 day bills offered remained unchanged at 11.40% and 11.84%, with all subscriptions met, while the 364-day bill which recorded a 4.96 bid to cover ratio, cleared 15bps lower at 12.25%. 

We expect the market to remain bullish, due to the existence of ample system liquidity, occasioned by the lower volume of OMO issuances by the CBN.

 


OMO  - 4 July 2019

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

112 day

11.40

50.00

33.11

33.11

266 day

11.84

50.00

73.80

73.80

364 day

12.25

200.00

779.75

157.23

Source: CBN

 

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Source: Zedcrest Dealing Desk


 

Money Market

Rates in the money market inched slightly higher following a c.N264bn OMO sale by the CBN. The OBB and OVN rates consequently ended the session at 4.14% and 4.86%, with system liquidity currently estimated at c.N525bn positive. 

We expect rates to trend slightly higher tomorrow, due to funding for the CBN’s bi-weekly retail FX auction.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.14

3.29

Overnight (O/N)

4.86

4.00

Source: FMDQ, Zedcrest

 

FX Market

At the interbank, the Naira/USD rate remained stable at N306.95/$ (spot) and N357.53/$ (SMIS). The NAFEX rate at the I&E window rose by 15k to N360.76/$, as market turnover dipped by 9% to $294m. At the parallel market, the cash and transfer rates remained stable at N358.60/$ and N362.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

357.53

357.53

I&E FX Window

360.76

360.61

Cash Market

358.60

358.60

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns remained bullish, with yields lower by c.7bps on the day 

Demand interests remained robust on the NGERIA Corps, with continued price gains witnessed across most traded tickers.


 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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