Slight Compression in yields, as CBN holds off On OMO


Friday, April 6, 2018 /6:30 PM/Zedcrest Capital

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The bond market traded on a very calm note, with minimal trading interests observed, as traders wound up activities for the week. Yields were relatively stable, compressing slightly by c.2bps due to slight contraction on the short and the medium end of the curve. This was as the CBN abstained from an OMO T-bill auction, following a significant sale in the previous session. Our near term outlook for yields remains relatively stable, but slightly skewed to the upside at -10/+20bps around our 13.50% average mark. We are consequently underweight FGN bonds at the moment, whilst anticipating release of the Q2 FGN Bond calendar.


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Treasury Bills

The T-bills market traded on a slightly bullish note, with demand on some short and medium tenured maturities. This was as system liquidity remained significantly positive at c.N438bn while the CBN held off on OMO. We expect the market to remain relatively stable opening next week, with an OMO auction not expected until Tuesday due to an FX sale expected on Monday.


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Money Market

The OBB and OVN rates dipped slightly to close at 3.67% and 4.00%, as there were no significant funding pressures in the market. Rates are expected to inch slightly higher, due to the FX SMIS expected on Monday.


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FX Market

The Interbank rate remained relatively stable at its previous rate of N305.60/$, with the CBN’s FX reserves recorded to have improved by 1.51% to $46.55bn as at 4-April. The NAFEX rate appreciated further by 0.04% to N360.01/$. Rates in the Unofficial market also appreciated by 0.03% to N360.50/$.


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The NGERIA Sovereigns remained significantly bullish today, with yields compressing further by c.6bps on average. Investors were mostly bullish on the 2047s, 2032s and 2027s which gained a further +0.60pt on average.


The Nigerian banks were mostly quiet. We witnessed slight buys on the Zenith 19s, while investors remained slightly bearish on the FIDBAN 22s and FBNNL 21s. The SEPLLN 23s got lifted higher, last traded at 100.15.


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