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CBN Mops up Inflows from Maturing bills with N150bn OMO sales.

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Thursday, March 08, 2017 10:10 PM /Zedcrest Capital

***Nigeria’s Feb. Crude Output Rose to 1.73M B/D *** - NNPC

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Bonds

The Bond market traded on a slightly bullish note, with slight buys especially on the 2027s which was bought down to c.13.73%. We however witnessed some support at this level, with yields closing just c.4ps lower than their previous level. We consequently expect yields to close the week on a relatively calm note, barring any renewed client interest on bonds.

 

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Treasury Bills

The T-bills market traded on a relatively flat note as the CBN resumed its OMO auction with a total sale of c.N150bn to mop up inflows from c.N156bn maturing OMO bills. We witnessed some sell off on some shorter tenured bills as some market players were looking to switch duration into some longer tenured bills. We expect the market to close the week on a relatively quiet note, barring a significant OMO auction by the CBN which could take yields slightly higher especially on the short end.


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Money Market

The OBB and OVN rates declined slightly to 9.50% and 10.25% respectively, as inflows from OMO T-bill maturities more than offset outflows for today’s OMO sales by c.N6bn. System liquidity also improved significantly from its previous day’s level to close at c.N200bn positive. We expect rates to close the week on a relatively calm note, barring a significant OMO sale by the CBN.


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FX Market

The Interbank FX rate remained stable at its previous rate of N305.80/$, with the CBN’s external reserves recorded to have improved by 1.62% to $43.29bn as of 3 March.

The spot rate in the Investors and Exporters’ FX Window depreciated slightly by 0.02% to close at N360.26/$ from N360.17/$ in the previous session. Total volume traded also fell by 30% to a ytd low of $85m.

Rates in the Unofficial market however remained stable at N361.00/$ for the third consecutive session since the start of the week.

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Eurobonds

The NGERIA sovereigns were relatively quiet for most of the day. We however witnessed some sell interest on the 2032s especially, with the yield curve inching slightly higher by c.3bps on average.

Trading sentiments on the Nigerian banks were relatively mixed, with the DIAMBK 20s still on top of the pack. Buyers also came for the GT 2018s, Zenith 19s and Access 21s snr, while the FBNNL 20s and ECOTRA 21s were mostly sold off by market players.

The Seplat Eurobond Launch which was largely expected for today, has been postponed to next week. $500m is the total expected issuance size. We expect bids to be anywhere between 7% - 11%, even as most market players are looking for higher risk premiums to compensate for historical operating and default risks within its jurisdiction. Union Bank is also believed to be preparing for a launch soon.

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 Information on all Nigerian bonds is available here

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