The Nigeria Bond Watch - Review and Outlook @041816


Monday, April 18 2016 11: 02 AM/ DLM Research

Download Full Report Here

During the week under review, major themes that influenced the domestic fixed income market were: 1) The April 2016 FGN bonds auction by the DMO; 2) OMO bills auction and redemption by the CBN; and 3) The release of March inflation figure (12.80%) by the National Bureau of Statistics (NBS).

At the monthly FGN bond auction, N20.00billion worth of 15.54% FEB 2020 (5yr), N40.00billion of 12.50% FGN JAN 2026 (10yr) and N40.00billion of 12.40% FGN MAR 2036 (20yr) were re-opened at marginal rates of 12.00%, 12.60% and 13.08% for 5year, 10year and 20year respectively. Total subscription stood at N206.73billion, 188% of amount offered.

At the OMO auctions, the CBN offered N130.00billion OMO bills with tenors ranging between 217day to 261day but sold N139.98billion at marginal rates of 9.00%. Subscription stood at N278.82billion, 214% of amount offered.

In our opinion, the high subscriptions at the auctions are indicative of elevated system liquidity from OMO bills redemption worth c.N91.42billion.

The domestic fixed income market opened last week on a bullish note due to robust system liquidity. However, this trend reversed from the mid to the tail-end of the week as auctions’ marginal rates closed higher than anticipated, which triggered some sell off across the curve. More so, the decision to remove Nigeria from Morgan Stanley Capital International Frontier Markets Index on lack of liquidity and currency controls as well as the rise in inflation rate (from 11.40% to 12.80%) equally contributed to the selling spree. Yields rose by an average of 32 basis points across the curve on a week on week comparism.

In the week ahead, the DMO is expected to offer N167.52billion Treasury bills – (91day: N36.79billion, 182day: N35.00billion and 364day: N95.73billion). Also, we expect redemption of treasury bills worth c.N167.52billion. The market may remain bearish this week with consequent rise in yields as system liquidity gradually dwindles whilst dealers take positions ahead of the auction.

Related News:
The Nigeria Bond Watch - Review and Outlook @041116

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
Proshare is Nigeria’s Premier Financial, Business and Economic Information Hub (since 2006)
Registered Office: Plot 590B, Lekan Asuni Close, Omole Phase II, Isheri LGA, P.O. Box 18782, Ikeja, Lagos, Nigeria. Telephone: 0700 PROSHARE (070077674273)
Some of our Trademarks are: WebTV, TheAnalyst, Proshare, Personal Finance, The Nigerian Capital Market Reports, Money Africa, The Nigerian Investor, Making Money in the Nigerian Capital Market, Investor Relations Service, Proshare Investment Clubs, DIGITALTV, Islamic Finance, The Market Opening Gong
Proshare - Facebook Proshare - Twitter