The Nigeria Bond Watch - Review and Outlook @022216

Proshare

Monday, February 22 2016 10: 32 AM/ DLM Research

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ANALYSIS
During the week under review, activities in the domestic fixed income market were influenced by treasury bills auction and redemption by the CBN and the release of January inflation figure (9.60%) by the National Bureau of Statistics (NBS).

At the treasury bills auction, N32.44billion, N30.00billion and N80.00billion of 91day, 182day and 364day benchmarks were offered and sold at marginal rates of 4.85%, 7.30% and 8.98% against 4.95%, 7.98% and 9.49% respectively at the previous auction. Total subscription stood at N513.73billion, 361% of amount offered.

In our opinion, the high subscription was due to excess system liquidity in addition to inflows from treasury bills redemption worth N142.44billion.

The bullish sentiment in the fixed income OTC market was sustained last week on the back of buoyant system liquidity. The shorter tenors witnessed mild sell off whilst the mid and longer tenors saw increased buying activities. Consequently, yields declined by an average of 31basis points across the curve.

In the week ahead, we expect redemption of OMO bills worth N257.93billion. Barring any OMO auction from the CBN and given the current system liquidity, the buying spree in the market may continue this week.

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