The CBN Accelerates Its Liquidity Mop Up Exercise With A Fourth Consecutive OMO Auction

Proshare

Wednesday, December 05, 2018/ 06:23AM / Zedcrest Capital

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.26%

As at November 21, 2018. A c.2bps down from 11.28% recorded in September 2018

MPR

14.00%

Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting

External Reserves

$42.33bn

As at December 3, 2018. A c.0.38% increase from $42.17bn on November 30, 2018

Brent Crude

$62.07pb

As at December 4, 2018. A c.0.21% increase from $61.94pb on December 3, 2018

 

Bonds

Sentiments in the Bond market remained bearish, as investors stay risk-off especially on the short-end of the curve. Higher yields on T-bills continues to lure investors in the interim as the Fixed Income yield curve remains inverted.

 

We expect the market to remain weak as market participants’ price in expected supply from the December FGN bond auction as well as the DMO plans to issue N100bn 7-year Sukuk Bonds later this month.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.00

14.53

0.00

14.50 15-Jul-21

15.63

15.32

0.05

16.39 27-Jan-22

14.93

14.53

0.00

14.20 14-Mar-24

15.30

15.11

0.00

12.50 22-Jan-26

15.84

15.70

0.03

16.29 17-Mar-27

15.84

15.71

0.01

13.98 23-Feb-28

16.00

15.88

0.01

12.15 18-Jul-34

15.80

15.59

0.01

12.40 18-Mar-36

15.80

15.65

0.03

16.2499 18-Apr-37

15.75

15.66

(0.01)

Source: Zedcrest Dealing Desk

 

Treasury Bills

Activity in secondary market for T-bills continue to take a back seat as the market digest the daily supply of OMO T-bills issued by the Central Bank of Nigeria (CBN). Volumes traded remained low, as yields remained largely unchanged across the NTB curve.

 

For the fourth trading session in a row, the CBN sold a total of N94.50bn across three maturities on offer. The Apex bank made no change once again to the stop rates on the mid- (191-day) and long-end (324-days) bills at 13.50% and 15.00% respectively, while there was no sale on the short-end (93-day) maturity offered.

 

We maintain our cautious outlook on T-bills, as expectations for yields to trend upwards remain due to reduced system liquidity levels and expectations for continued OMO supply as the week progresses.


OMO Auction Result

Tenor

Rate (%)

Offer (₦’bn)

Sub (₦'bn)

Sale (₦'bn)

93-days

Nil

50.00

Nil

Nil

191-days

13.50

50.00

10.77

10.77

324-days

15.00

150.00

83.73

83.73

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Jan-19

14.00

13.20

0.00

14-Feb-19

14.00

13.75

0.00

14-Mar-19

13.30

13.00

0.00

4-Apr-19

14.00

12.85

0.00

2-May-19

14.00

12.75

0.00

18-Jul-19

13.80

12.75

0.00

1-Aug-19

14.10

13.70

0.00

12-Sep-19

15.00

14.40

0.10

3-Oct-19

14.90

14.60

(0.05)

14-Nov-19

15.00

14.50

0.05

Source: Zedcrest Dealing Desk

 

Money Market

Despite the CBN’s attempt to stem the excess liquidity via the sale of OMO securities (c.N94.50bn), money market rates closed slightly higher at 8.67% (from 6.67%) and 9.50% (from 7.67%) for Open Buy-Back (OBB) and overnight (O/N) respectively. System liquidity is consequently estimated at c.N187bn as at close of business today.

 

We expect funding rates to tick slightly higher tomorrow as the CBN is expected to continue its aggressive liquidity mop up exercise via OMO auctions.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.67

6.67

Overnight (O/N)

9.50

7.67

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank market, the Naira/USD rate remained unchanged to close at N306.85/$ (spot) and N359.81/$ (SMIS). Value traded at the I&E FX window picked up today with a total trade turnover of $208.15m traded in 293 deals, with rates ranging between N358.00/$ - N365.65/$. The NAFEX closing rate depreciated by c.0.17% to close at N364.63/$ from N364.00/$ previously.

 

Rates remained calm at the parallel markets, with both cash and transfer rates remaining stable to close at N368.00/$ & N372.00/$ respectively.


FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.85

CBN SMIS

359.81

359.81

I&E FX Window

364.63

364.00

Cash Market

368.00

368.00

Transfer Market

372.00

372.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereign Eurobonds traded slightly weaker as talks of oil production cuts unsettled the Sub-Saharan Africa space. Volume of trades increased on the day, as yields ticked higher by c.7bps on the average across the curve.

 

The NGERIA Corps continued to enjoy positive sentiments across some tracked tickers, yields compressed further following investor demand. The ACCESS 21s Subs and DIAMBK 19s continued lead the market, as demand interests pushed yields on the papers lower by c36bps and c.251bps respectively.



Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd.


 

 

Related News

1.       Yields Continue to Rise as CBN Maintains Rates at 3rd Consecutive OMO Auction

2.       Bullish Run Reversed as Yield on Long Dated Bills Hit 17.0%

3.       Money Market Rate Increased Significantly Last Week As The Overnight Rate Rose To 17.36%

4.       Access Bank Plc Series XX N30billion Commercial Paper Closes Tomorrow

5.       December 2018 FGN Savings Bond Offer for Subscription

6.       CBN Sends Hawkish Signals to The Market, Hikes OMO Rate to YTD Highs

7.       Fixed Income Markets Trend Bearish as CBN Hikes OMO Rate

8.      Stop Rates Remain Unchanged As The CBN Successfully Rolls Over Maturing Ntbills

 

READ MORE:
Related News
SCROLL TO TOP