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Bond Market closes flat as Traders stay cautious

Proshare

Friday, November 10, 2017 7:30PM / @ZedcrestCapital 

The Bond Market
The bond market traded with mixed sentiments today, with slight buys witnessed at the opening of market. Some market players however sold some long end bonds before the close of market, with the average bond yields compressing just marginally by 1bp to 15.04% from 15.05% in the previous session. We expect the market to open next week on a relatively quiet note due to weak demand for bonds in the market. 

Table 1: FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

15.24

15.17

0.00

15.54 13-Feb-20

14.96

14.89

0.00

14.50 15-Jul-21

15.14

15.07

(0.01)

16.39 27-Jan-22

14.78

14.71

(0.01)

14.20 14-Mar-24

15.00

14.93

(0.09)

12.50 22-Jan-26

15.14

15.07

0.00

16.29 17-Mar-27

15.23

15.16

0.07

12.15 18-Jul-34

14.94

14.87

0.01

12.40 18-Mar-36

14.97

14.90

(0.13)

16.25 18-Apr-37

14.97

14.90

0.01

Source: Zedcrest Dealing Desk 

Treasury Bills
The T-bills market was relatively quiet today, with slight buys witnessed on some short tenured bills. The medium to long end traded flat, as market players poured their demand into the OMO auction by the CBN. The CBN sold a total of N5.63bn 90-day and N60.99bn 181-day bills, with rates maintained at 16.00% and 17.80%. We expect the market to open next week on a relatively quiet note, as the CBN is expected to continue with its OMO auctions which are currently issued at rates slightly above market on the medium to long end bills. 

Table 2: Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

7-Dec-17

17.00

16.75

0.00

4-Jan-18

17.20

16.95

(0.10)

1-Feb-18

17.50

17.25

(0.10)

1-Mar-18

17.60

17.35

0.00

5-Apr-18

17.50

17.25

(0.05)

3-May-18

17.40

17.15

(0.10)

14-Jun-18

17.85

17.60

0.00

5-Jul-18

17.00

16.75

0.00

2-Aug-18

16.70

16.45

0.50

13-Sep-18

16.30

16.05

0.00

4-Oct-18

15.90

15.65

0.00

Source: Zedcrest Dealing Desk 


OMO - 10 November 2017

Tenor

Rate (%)

Offer (NBn)

Sub (N'bn)

Sale (N'bn)

 90 day

16.00

20.00

5.63

5.63

181 day

17.80

50.00

60.99

60.99

Source: CBN  

The Money Market
The OBB and OVN rates remained unchanged from the previous day’s levels to close today at 7.17% and 7.75%. Market liquidity is however estimated to decline to N6bn positive (from a positive opening figure of c.N72bn), due to debits for today’s OMO auction. We expect rates to open next week around these levels, as anticipated outflows from OMO and FX sales on Monday are expected to be offset by inflows from retail FX refunds by the CBN. 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

7.17

7.17

Overnight (O/N)

7.75

7.83

Source: FMDQ, Zedcrest Research  

The FX Market
The CBN Official spot rate remained stable at its previous day rate of N305.90/$. Its external reserves is however recorded to have improved by 2.04% to $34.12billion as at 9th of November. Rates at the Investors and exporters FX window closed at N360.40/$ from N360.55/$ in the previous session. The parallel market rate however stayed unchanged at N361.20/$. 

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.95

305.90

CBN SMIS

330.00

330.00

I&E FX Window

360.55

360.33

Parallel Market

361.20 

361.20

Source: FMDQ, REXEL BDC 

Key Events in the Coming Week
November 15, 2017: T-Bills Primary Market Auction (N120bn)

November 16, 2017: OMO T-bill Maturities (N133bn)
  

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