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Bond yields drop 10bps on renewed offshore demand as CBN holds back on OMO

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Wednesday, January 9, 2018 7:00PM / @ZedcrestCapital

*** BDCs Seek Forex Rate Convergence***
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Bonds

The Bond market resumed its bullish run in today’s session, due to renewed demand from some offshore buyers, especially on the 10– and 20-yr bonds. Average bond yields consequently declined by 10bps to 13.47%. We expect the market to be majorly client driven in the near time, as market players closely watch offshore activities, whilst awaiting the Q1 FGN bond calendar.

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Treasury Bills

The T-bills market traded with mixed sentiments in today’s session, even as the CBN held back on its OMO issuance for the first time since its resumption on the 18th of December. We witnessed some sell on the short end of the curve (Feb - May), while market players bought some of the longer tenured maturities, due to absence of OMO. We expect the market to be slightly bullish tomorrow, even as the CBN is expected to resume its OMO issuance Wednesday/Thursday to mop up inflows from c.N309bn maturing OMO T-bills on Thursday.

 
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Money Market

The OBB and OVN rates declined slightly to 16.33% and 17.21%, with market liquidity still in positive territory of c.N79bn as published by the CBN. We expect rates to be relatively stable, with market liquidity much higher than earlier anticipated, coupled with expectations of inflows from maturing OMO bills on Thursday.


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FX Market

The CBN Official spot rate remained stable at its previous day rate of N305.90/$. Rates at the Investors and exporters FX window appreciated by 0.49% to N359.68/$. Rates at the parallel market however depreciated by 0.03% to N361.40/$.

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