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The Nigerian Bond Watch @070212 – DLM



Tuesday, February 07, 2012 10:44 AM / Dunn Loren Merrifield

During the week under review, Monetary Policy Committee’s decision to maintain policy rate given the need stabilize the economy and the Federal Account Allocation Committee (FAAC) inflow of about N559.1 billion were the major drivers in the fixed income market.

Following the outcome of the most recent FGN bonds auction, traders initially rallied the ten-year bonds into a positive territory considering that those bonds are the most attractive in the market currently. However, with the inflow of liquidity to the system as a result of FAAC disbursements, the CBN saw the need to control money supply by issuing about N195 billion worth of OMO bills with tenors ranging from 56 days to 251 days. This reversed the positive trend earlier witnessed after the MPC outcome forcing most trading bonds to close the week on a negative note (average -0.0069%) when compared to the opening prices at the start of the week.

The bond market also witnessed maturity of N125 billion worth of 9.92 Jan 30, 2012 which reduced the outstanding volume of FGN bonds to about N3.5 trillion.

The treasury bills secondary market was active as yields trended high at the end of the week due to the high marginal rates witnessed at the OMO auctions.

In the week ahead, we are looking forward to the issuance of treasury bills worth circa N149.3 billion with tenors of 91, 182 and 364 days whilst N212.9 billion is expected to mature during the week. In respect to the above, the market is expected to remain stable.

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