CBN Sells N600bn T-bills to Mop up Excess Inflows from Maturing Bills

Proshare

Thursday, May 3, 2018 /6:32PM/Zedcrest Capital

***Nigeria, China sign $2.5bn currency swap deal***

Proshare Nigeria Pvt. Ltd.

 

Bonds

The bond market opened on a relatively quiet note, but turned slightly bearish following release of the OMO auction results which showed a significant sale of c.N600bn at a 5bps higher rate. Yields consequently retraced slightly by c.6bps, as market players have begun to speculate on a continued hike in OMO auction rates by the CBN. We expect the market to remain slightly bearish tomorrow, due to relatively weak demand for bonds and risk off sentiments by market players. 


Proshare Nigeria Pvt. Ltd.


Treasury Bills

The T-bills market also witnessed slight retracements following the OMO auction announcement by the CBN with a relatively significant amount of N500bn on offer. The CBN eventually sold c.N600bn of the 105 and 245-day bills at 11.00% and 12.10% respectively, with subscription on the latter prorated by c.50%. This consequently pushed yields higher especially on the Aug and Nov maturities. We expect the market to remain slightly bullish, due to pent up demand for treasury bills in the market.

 

Proshare Nigeria Pvt. Ltd.

Money Market

The OBB and OVN rates inched higher to 4.42% and 5.00%, its highest in 4weeks. This was following the significant OMO T-bill Sale of c.N600bn, which was slightly offset by c.N400bn in OMO T-bill, PMA and Stab Sec maturities. System liquidity is consequently estimated at c.N200bn positive as at COB today. We expect rates to close the week on a stable note, barring another OMO auction by the CBN, which is largely unexpected.

 

 

Proshare Nigeria Pvt. Ltd.

 

 

FX Market

The Interbank rate remained stable at its previous rate of N305.70/$, with the CBN’s external reserves recorded to have improved by 1.54% to $47.36bn. The NAFEX rate appreciated slightly by 0.04% to N360.67/$, while rates in the Unofficial market remained stable at N361.50/$.

 

 
Proshare Nigeria Pvt. Ltd.

 

Eurobonds

The NGERIA Sovereigns stayed relatively calm in today’s session, with slight recoveries witnessed on the longer end of the curve, following huge amounts of selloff witnessed in previous sessions. The 2047s gained c.0.50pt, having last traded 97.78 and now trading 97.50/98.50. We note that the US FED  kept rates unchanged at its FOMC whilst maintaining a slightly dovish stance in its comments on inflation, and economic growth potential, consequently strengthening an expected 3-rate hike bias instead 4. We consequently expect slight recoveries in the EM space and believe current levels present good buying opportunities in the near term.

 

The NGERIA Corps were relatively quiet, but with slight bearish sentiments on the longer tenured tickers (the Zenith, UBANL and FIDBAN 22s). The SEPLLN 23s were are also traded lower, last trades seen at 101.15, now trading 100.75/101.50.

 

The Angola 10 and 30-yr bonds were finally sold at 8.25% and 9.375% respectively, with $1.75bn and $1.25bn sold on the 10 and 3o-yr out of a total subscription of c.$9bn. Last mkt quotes seen at 100/100.50 (28s) and 100.80/101.20 (48s).


Proshare Nigeria Pvt. Ltd.



 

 

Related News

1.       N95bn T-bills PMA gets Oversubscribed by 420% as Stop rates crash by c.100bps

2.       CBN to Auction N95bn Treasury Bills after Mayday Break

3.       Buying Interest to Sustain Bullish Trend Ahead of PMA

4.       Market Players Trade with Mixed Sentiments amid OMO Uncertainty

5.       April 2018 FGN Bond Auction - Total Subscription Was N262.48bn, A Subscription Rate of 292%.

6.       Another Auction In Line With The Script

7.       Bearish Reversals in FI yields as CBN Resumes OMO at Slightly Higher Rate

8.       Summary of April 2018 FGN Bond Auction

9.       DMO Sells N90bn of 3, 5 and 10-yr Bonds at About 3 times Bid to Cover

10.   Nigeria: Political Risk Brewing – Zedcrest

11.   Bond Yields Retrace by c.20bps ahead of N90bn Bond Auction

12.   Bond Yields close relatively stable amid slight profit taking by offshores

13.   Bond Yields Trend Lower as CBN Crashes OMO rate by c.200bps

14.   T-Bill Yields Continue Downtrend as Market Players Oversubscribe 1-yr PMA at 16X bid to cover

15.   Bond Yields hit Two-year low, as DMO releases Q2 Calendar

16.   Invest in FGN Monthly Bond Auction – April 2018

READ MORE:
Related News
SCROLL TO TOP