Slight Decline in Bond Yields as CBN holds off on OMO


Friday, March 09, 2017 10:10 PM /Zedcrest Capital

***CBN Injects $355.43m into FX Market ***

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The bond market was very quiet in today’s session, as traders wound up their activities for the week. We however witnessed some buy interests especially on the 2020s and 2036 bonds which took yields lower by c.2bps on average. We expect the market to remain relatively calm in the coming week as traders are expected to maintain a relatively bullish sentiment in anticipation of a further decline in inflation, whilst client demand on the other hand is expected to remain relatively thin on the back of continued OMO expectations.


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Treasury Bills

The T-bills market traded on relatively calm note with slight buy interests observed on some short and medium tenured maturities, in absence of an OMO auction by the CBN. Yields however stayed relatively flat as most market players do not expect any significant change in OMO issuance by the CBN. Market players will next week shift their focus to the much anticipated NTB calendar, as we anticipate the likely impact of the Eurobond sale by the DMO, whilst noting that the DMO cut its last NTB issuance after the Eurobond launch in half.



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Money Market

The OBB and OVN rates declined slightly to close the week at 8.50% and 9.17% respectively, as there were no significant pressures on system Liquidity estimated to close the week at c.N180bn positive. We expect rates to inch slightly higher on Monday due to expected OMO and Wholesale FX sales, this should however be moderated by expected inflows from retail FX refunds to banks by the CBN.


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FX Market

The Interbank rate remained stable at its previous rate of N305.80/$, with the CBN’s external reserves recorded to have improved by 1.61% to $43.62bn as of 8 March. 

The NAFEX rate depreciated slightly by 0.02% to close at N360.32/$ from N360.26/$ in the previous session. Total volume traded rose by 135% to $201m from a ytd low of $85m recorded in the previous session.

Rates in the Unofficial market however remained stable at N361.00/$ for the fourth consecutive session of the week.

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A very quiet trading session in the NGERIA sovereigns which were much sought after in the earlier part of the week. Slight sell interests on the 2030s took the curve 1bp above its previous level. We expect renewed buy interests in the coming week, with yields relatively attractive on the 30s and 47s.

Trading in the Nigerian banks were also relatively quiet with some buys witnessed on the Access 21s Snr and GTbank 18s, while investors remained bearish on the FBNNL 20s and the Zenith and UBANNL 22s.

In the coming week, market players would be looking forward to the Seplat Eurobond launch with a total issuance size of $500m.


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Information on all Nigerian bonds is available here

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