Absence of CBN OMO Fuels Rally on Long Tenor Bills

Wednesday, February 27, 2019  06:00 AM / Zedcrest Capital

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KEY INDICATORS

Bonds

The FGN Bond market remained relatively stable with yields marginally lower by c.1bp on the day. Investors remained slightly bullish, but the strength of the demand had waned from the stance in the previous session.

We expect investors to become slightly cautious as we edge closer to announcements of the final election results.

Source: Zedcrest Dealing Desk

Treasury Bills

The T-bills market traded on a firmly bullish note, with increased demand witnessed mostly on the longer end of the curve. This came on the backdrop of the contiuned absence of a CBN OMO sale for the third consecutive session.

The CBN on behalf of the FG will conduct an NTB auction tomorrow, with a total of c.N115bn T-bills on offer. Given the increased long tenor demand and in view of the relatively lower volumes on offer, we expect stop rates to clear signifcantly lower from their previous levels. The rate of demand aggresiveness should however be moderated by expectations for a renewed OMO offering by the CBN come Thursday.

Source: Zedcrest Dealing Desk

Money Market

Rates in the money market moderated further by c.5pct as system liquidity improved to c.N110bn in absence of the regular CBN OMO auctions

We expect rates to remain relatively unchanged as there are no significantly inflows expected tomorrow. Market players however anticipate significant inflows from FAAC payments before weekend.

Source: FMDQ, Zedcrest Research

FX Market

At the Interbank, rates remained unchanged at N306.85/$ (Spot) and N356.97/$ (SMIS). The NAFEX rate in the I&E window remained relatively unchanged at N361.50/$. At the parallel market, the cash and transfer rates remained unchanged at N357.80/$ and N365.50/$ respectively.

Source: CBN, FMDQ, REXEL BDC

Eurobonds

The NGERIA Sovereigns traded relatively flat, with yields marginally lower by c.1bp on the day.

In the NGERIA Corps, we witnessed slight interests on the ACCESS 21s Sub, FBNNL 21s and ECOTRA 21s. Bids however remained relatively weak on the DIAMBK 19s.

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