Anchoria Fixed Income Monitor: CBN Slashes MPR to 12.50% While It Retains Other Parameters

Proshare

Monday, June 01, 2020 / 4:08 PM / By Anchoria AM Research / Header Image Credit: Investopedia

 

Proshare Nigeria Pvt. Ltd.


Money Market

The average money market rate fell significantly last week by 12.72% to settle at 2.60% from 15.32% in the previous week. This is attributable to the inflow from FGN Bond coupon payments worth N5.63 billion and OMO maturities worth N319.72 billion.

 

Other outflows for the week included: FX wholesale SMIS of $210mn

 

Also, at the Monetary Policy Committee (MPC) meeting last week, the Central Bank of Nigeria surprisingly reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% while other parameters such as the Cash Reserve Ratio (CRR) remained at 27.50% and Liquidity Ratio at 30.00%. As part of the CBN's monetary and fiscal policy measures to curb the effect of the pandemic on the economy, the bank reduced the interest rates on the CBN intervention facilities from 9% to 5% per annum from 1-year effective March 1, 2020.

 

We expect the system liquidity to be buoyant with OMO maturities worth N155.78 billion expected during the week. Also we expect increase activities in CBN Lending window this week.

 

Proshare Nigeria Pvt. Ltd.

 

Forex: USD/NGN

Nigeria's external reserve have sustained its continuous increase as the reserve rose by 1.76% to close at $36.50 billion. Despite, the recent gradual increase of the external reserve, the rate at the I&E Fx window last week depreciated by 10bps to close at N386.33/$. The CBN official rate remained stable at N361.00/$. We saw a reduced demand pressure at the parallel market last week as the rate strengthen to N451/$

 

We expect pressure in the foreign exchange market to reduce as crude oil price improves and the country's external reserve increases.

 

Proshare Nigeria Pvt. Ltd.

 

Bond: FGN

The secondary sovereign Bond market closed bullish last week as the average yield fell by 30bps to close at 10.11% compared to 10.40% in the previous week. Yields declined across all instruments except the MAR-2024 bond which increased by 6bps to close at 8.96% while the largest yield decline of 115bps was witnessed in the MAR-2025.

 

The Sovereign Eurobond market closed on a bullish note as the average yield fell by 4bps to close at 8.73% compared to 8.77% the previous week. The Corporate Eurobond market also closed bullish as the average yield fell by 36bps to close at 11.54% compared to 11.90% the previous week.

            

We expect increased interest in both domestic bond and Eurobond as the Oil price continued to sustain above the $30 per barrel price and as rate at the money market continued to remain low.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

Treasury Bills

The T-bills secondary market closed on a bullish note last week as the average yield fell by 5bps to close at 2.12% compared to 2.17% the previous week. In the same vein, OMO bills fell by 2bps to close at 6.05% compared to 6.07% the previous week.

 

At the Treasury bills auction held last week, the CBN fully allotted N59.37 billion worth of bills - N20.37 billion - 91-day, N19.16 billion - 182-day and N19.84 billion - 364-day - at respective stop rates of 2.45% (previously 2.50%), 2.72% (previously 2.85%), and 4.02% (previously 3.84%). (See next page for T-bills result).

 

Proshare Nigeria Pvt. Ltd.

 

Commodities

WTI crude oil spiked by 6.74%, notching its best monthly performance gain on record. The surge in oil prices comes just one month after oil prices went negative for a brief period of time, as demand for oil plummeted amid the economic shutdown caused by the COVID-19 pandemic. In the same vein, Brent oil rose by 0.57% to close at $35.33 compared to $35.13 the previous week.

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Related News

  1. Strong Demand Witnessed at PMA; Average Yield in NT-Bills Market Sheds 5bps WoW
  2. Double Whammy: Central Bank Shocks The Market With Slashes To MPR And OMO Rates
  3. A Relatively Quiet Day For Fixed Income Markets As Treasury Bills Primary Market See Healthy Demand
  4. Anchoria Fixed Income Monitor: Bond Auction worth N60bn mops System Liquidity
  5. Average Yield on NT-Bills Declines 11bps WoW, PMA Holds Today
  6. UCAP Raises N10bn in Series 1 Bond Issuance
  7. MTNN Notifies of Proposed Series I and II Commercial Paper Issuance Of Up to N50bn
  8. Drab Trading Activity As The Markets Reacted To Low System Liquidity
  9. A Highly Successful Auction for the DMO in May 2020
  10. Rising Inflation And Impending Sukuk Supply Weigh On Bond Trading Activity
  11. Summary of FGN Bond Auction Results For May 2020
  12. DMO Comfortably Raises N390.70Bn At The FGN Bond Auction As Local Demand Swells

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP