Monday, April 7, 2014 12:05 AM/ DLM Research
Download Full Report Here
The major highlights of the review week were the persistent issuance of OMO bills by the CBN and an observed increase in interest from domestic investors, especially pension funds Administrators (PFAs).
In line with the prevailing monetary policy stance, consistent liquidity tightening was maintained during the week as a total of
N210.0billion worth of OMO bills with tenors ranging between 112days and 136days were offered while a total of N122.40billion was sold at marginal rates ranging from 13.04% to 13.10%; subscription level was N156.14billion. We noted a relatively high level of subscription and low sales during the auction - an indication of the combination of high system liquidity and the CBN’s resolve not to allow rates exceed a 13.10% cap. The latter was highlighted by the fact that there was no sale at one of the auctions that took place during the week. We however note that the reason for the liquidity tightening by the apex bank (CBN) could not be unconnected with OMO bills that matured during the week.
At the OTC market, there was an increase in interest in FGN bonds, which accounted for a marginal increase in the yields of tradable bonds. Meanwhile, the subsequent sell-off seen during the week wasn’t strong enough to reverse this trend. In our view, this trend may persist in the next couple of days in the absence of any major event capable of significantly affecting the market.
In the week ahead, we expect that treasury bills worth c.
N183.65billion will be offered; we expect bids to range between 11.80% - 12.10% for the 91days bill and 12.95% - 13.35% for the 182days and 364days bills. Also expected is the treasury and OMO bills maturity worth c. N183.65billion and c. N357.47billion respectively. Therefore, we anticipate that system liquidity will remain elevated and sustained liquidity tightening by the CBN.
Related News for March:
1. The Nigeria Bond Watch - Review and Outlook @030314
2. The Nigeria Bond Watch - Review and Outlook @031014
3. The Nigeria Bond Watch - Review and Outlook @031714
4. The Nigeria Bond Watch - Review and Outlook @032414
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 [Email:firstname.lastname@example.org]