T-Bill Rates Decline Further in Absence of CBN OMO Auction

Proshare

Sunday, May 19, 2019  /  07:00PM  / Zedcrest Capital

 

The T-bills market remained bullish, with yields declining further by c.12bps due to the dearth of market offers from the continued lack of an OMO issuance by the CBN.

 

Most of the offers on the mid to long end of the curve are now at sub-12% discount, and we expect rates to remain depressed in the medium term, unless the CBN resumes its OMO auction sales at higher discount levels.

 

Below are highlights from activities within the Fixed Income and FX market on Friday, May 17, 2019. 

 

 

Bonds

The FGN Bond market closed the week on a relatively flat note, with most trades focused around the mid tenor maturities. Yields were a tad higher closing the day, as demand interests were relatively weaker compared to sentiments in the previous session. We consequently witnessed slight retracement in yields on the 21s and 26s which lifted the average yields marginally higher by c.2bps on the day.

 

We expect demand interest to remain relatively muted opening the new week, as market players anticipate a renewed supply of Bonds at the DMO’s monthly FGN bond Auction.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.41

13.95

0.22

16.39 27-Jan-22

14.28

13.84

(0.01)

12.75 27-Apr-23

14.45

14.01

(0.04)

14.20 14-Mar-24

14.45

13.93

0.00

13.53 23-Mar-25

14.45

14.16

0.00

12.50 22-Jan-26

14.44

14.21

0.11

16.29 17-Mar-27

14.32

14.19

(0.01)

13.98 23-Feb-28

14.38

14.24

0.00

12.15 18-Jul-34

14.39

14.23

(0.09)

12.40 18-Mar-36

14.54

14.30

0.02

16.2499 18-Apr-37

14.43

14.22

0.04

Source: Zedcrest Dealing Desk 

 

Treasury Bills

T-bills yields declined by c.12bps due to the dearth of market offers from the continued lack of an OMO issuance by the CBN. 

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

13-Jun-19

11.50

10.80

0.15

18-Jul-19

11.50

5.00

(0.25)

1-Aug-19

10.50

10.25

0.10

12-Sep-19

12.00

11.15

0.00

3-Oct-19

12.00

11.50

(0.20)

14-Nov-19

11.70

11.50

(0.45)

5-Dec-19

12.10

11.50

0.00

2-Jan-20

12.20

11.90

(0.20)

6-Feb-20

12.00

11.75

(0.40)

19-Mar-20

12.30

11.70

0.00

2-Apr-20

12.25

12.05

(0.05)

Source: Zedcrest Dealing Desk 

 

Money Market

Rates in the money market declined further by c.1pct as system liquidity remained robust at c.N290bn. The OBB and OVN rates consequently ended the session at 4.57% and 5.29%.

 

We expect rates to trend slightly higher on Monday, as banks fund for the weekly wholesale FX auction by the CBN. 

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.57

5.86

Overnight (O/N)

5.29

6.57

Source: FMDQ, Zedcrest Research 

 

FX Market

At the Interbank, the Naira/USD rate was unchanged at N306.95/$ (spot) and N356.60/$ (SMIS). The NAFEX closing rate in the I&E window however rose slightly by 0.05% to N360.50/$, whilst market turnover fell by 70% to $152m. At the parallel market, the cash rate decreased by c.0.03% to N359.00/$, while the transfer rate remained unchanged at N363.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

356.83

356.83

I&E FX Window

360.50

360.35

Cash Market

359.00

359.10

Transfer Market

363.50

363.50

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA Sovereigns weakened slightly in today’s session, with yields marginally higher by c.3bps following a dip in oil prices.

 

In the NGERIA Corps, we witnessed renewed interest for the longer dated tickers, especially the Zenith and UBANL 22s. 

 

 

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