Bond Yields decline further as Senate approves FG’s $5.5bn External Loan Plan


Tuesday, November 14, 2017 6:00PM / @ZedcrestCapital 

The Bond Market

Bond yields declined further in today’s session, as news of the senate’s approval of the FG’s $5.5bn external loan plan fueled some buying interests in the market. The 2027 and 2037 bonds were however the most patronized, as their yields declined by 11bps each. Average bond yields consequently declined by 7bps to 14.93%. We expect yields to decline slightly tomorrow, as market players maintain a positive outlook on the market. 

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Treasury Bills

The T-bills market was slightly bullish, with demand especially focused on the short end of the curve (Nov - Feb) which declined by about 53bps avg. The medium to long end of the curve was however relatively flat as the CBN continued with its OMO auction, selling a total of N950million 93-day and N17.75billion 177-day bills, with rates maintained at 16% and 17.80% respectively. We expect the market to remain slightly bullish tomorrow, as market players anticipate inflows from OMO maturities on Thursday. 

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PMA Expectations

The CBN would offer a total of about N120bn NTBs at its primary market auction tomorrow. We expect rates to clear at the following levels: 

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The Money Market

The OBB and OVN rates fell to 12.17% and 13.42%, as inflows of about N200bn from retail FX refunds by the CBN improved system liquidity to a positive opening level of c.N92bn. System liquidity is however estimated to close today at c.N73billion positive, due to debits for today’s OMO sale. We expect rates to trend around these levels tomorrow, as there are no significant outflows expected. 

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The FX Market

The CBN Official spot rate remained stable its previous day rate of N306.00/$. Its External Reserves is however recorded to have improved by 2.04% to $34.27billion as at 13th of November. 

Rates at the Investors and exporters FX window depreciated slightly to N360.27/$ from N360.20/$ in the previous session. The parallel market rate however stayed unchanged at N361.20/$. 

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