Bond yields Crash by 28bps amid renewed interests from offshore buyers


Saturday, April 14, 2018 /06:30 AM/Zedcrest Capital

*** CBN begins disbursement of N26bn agribusiness fund to MSMEs***

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The bond market traded on a significantly bullish note, largely driven by demand from offshore clients, especially on the 19s and 37s. The 19s compressed further by c.120bps, down to 12.30%, while the 37s gained as much as 1pt, up to 119.90. Yields consequently crashed by c.28bps on average. We expect these bullish sentiments to persist, but on a more moderate tone, as market players anticipate release of the Q2 FGN Bond calendar, which should calm bullish pressures, especially on the shorter end of the curve.

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Treasury Bills

The T-bills market also traded on a bullish note, with yields crashing by c.20bps across the curve. We witnessed most Demand on the 13-Dec bill, as market players were looking to cover for their lost auction bids consequently compressing its yield by c.74bps from its auction level. We expect the market to remain bullish as we do not expect another OMO Auction until Thursday, when we expect another OMO maturity of c.N276bn. The CBN is also expected to offer a total of c.N58bn of a 91-, 182– and 364-day bill at a PMA scheduled for Wednesday, which is half of the total PMA bills maturing Thursday.

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Money Market

The OBB and OVN rates declined slightly to 2.33% and 2.92%, as the market was awash with liquidity following inflows from retail FX refunds to banks in the previous session.  System liquidity is however estimated to decline to c.N400bn, following outflows for another round of retail FX funding today. We expect rates to remain relatively stable in the near term due to the buoyant level of liquidity in the market.


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FX Market

The Interbank rate remained stable at N305.55/$, with the CBN’s FX reserves also recorded to have improved by 1.52% to $46.75bn as at 9 April. The NAFEX rate depreciated further by 0.12% to N360.32/$, while rates in the Unofficial market traded flat at N361.00/$.

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The NGERIA Sovereigns closed the week on a slightly bullish note, with yields compressing by c.2bps across the curve. We witnessed most trades on the 27s and 30s, which gained +0.20pt on average.


In the Nigerian Corporate space, the SEPLLN 23s were the outperformers following the positive rally in oil prices. The bond was lifted at 100.50 and now trades at 100.50/101.25. Investors were bearish on the ZENITH, UBANL and FIDBAN 22s, but were slightly bullish on the ACCESS 21s sub.  The FBNNL 20s and 21s, however remained flat at 99.50 and 99.80 respectively.

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