Wednesday January 24, 2018/9.30pm/Zedcrest Capital
*** Nigeria May Cut Interest Rates before July*** - Emefiele
The bond market traded with mixed sentiments, opening on a slightly bullish note (down to 13.3% levels), whilst retracing back to 13.4% levels towards the close of day, as rumors from the bond auction filtered into the market. Most trades were done on the 2027s and 2037s with yields closing slightly higher by c.3bps across the curve. Results from the bond auction were fairly decent, with total sale of N45.12bn of the 2021s and N64.88bn of the 2027s, at 13.38% and 13.49% respectively. We expect the market to be slightly bullish tomorrow, with yields expected to trade lower than their auction levels, due to the fairly sizeable demand at the auction.
The T-bills market remained slightly bearish, with slight uptick of c.10bps in yields, as the CBN continued with its OMO auction, selling a total of N105million of the 19-Apr and N88bn of the 23-Aug bills, with rates maintained at 12.60% and 14.40% respectively. We expect the market to be slightly bullish tomorrow, due to anticipated inflows from c.N65bn OMO maturities and c.N315bn FAAC payments to state and Local Govts.
The OBB and OVN rates closed relatively unchanged from its previous day’s levels at 14.83% and 15.75%, with system liquidity estimated to decline to c.N50bn positive due to debits for today’s OMO sales by the CBN. We however expect rates to trend slightly downwards, as market players anticipate inflows from OMO maturities and FAAC payments.