The Nigeria Bond Watch - Review and Outlook @011816


Monday, January 18 2016 11: 12 AM/ DLM Research

Download Full Report Here


The overall direction of the market during the review week was dictated by: 1) the issuance of FGN bond issuance calendar for 1st quarter, 2016; and January 2016 FGN Bond Offer Circular by the DMO and; 2) OMO bills redemption – which influenced liquidity levels and affected market behavior.

As stated in the bond issuance calendar, the DMO is offering between N100.00 – N150.00billion, N120.00 – N180.00billion and N40.00 – N60.00billion for 5-Year, 10-Year and 20-Year benchmarks respectively in 1st quarter of 2016. This is 44% (or 117%) and 18% (or 78%) greater than preceding and corresponding quarters respectively.

At the OMO auctions, the CBN offered N80.00billion but sold N214.93billion OMO bills with tenors ranging between 147day and 220day at marginal rates ranging between 7.60% and 7.90%. Subscription level stood at N260.77billion (326% of volume offered). In our opinion, the high subscription was due to high system liquidity stemming from OMO bills redemption worth c.N250.17billion.

The fixed income OTC market experienced mixed reactions as buying activities dominated the short-end whilst the longer tenors witnessed sustained sell off. Consequently, yields rose by an average of 34basis points week-on-week.

In the week ahead, the DMO is expected to re-open N40.00billion worth of 15.54% FEB 2020 (5yr) and new issuance of N40.00billion of FGN JAN 2026 (10yr) at this week’s FGN bond auction. Similarly, treasury bills worth N195.96billion are expected to be on offer - (91Day: N36.79billion, 182Day: N39.18billion and 364Day: N120.00billion). We also expect redemption of treasury bills worth N195.96billion. Given the prevailing system liquidity and barring any OMO auction from the CBN, the market may continue to be mixed whilst market participants take position ahead of the auctions.

Related News:
The Nigeria Bond Watch - Review and Outlook @111115

Disclaimer/Advice to Readers:
While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the authors best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This article is published with the consent of Dunn Loren Merrifield, the author(s) for circulation to the online investment community in accordance with the terms of usage. Further enquiries should be directed to the author whose e-mail is [] Dunn Loren Merrifield Limited. 

Related News