CBN Succumbs to Market Pressures, Raises OMO Auction Rate

Proshare

Friday, August 16, 2019 / 07:40 AM / By Zedcrest Capital 


Yields in the T-bills market declined by c.30bps from the significant uptrend witnessed in the previous session. This came on the back of the slightly improved system liquidity level in the money market and a slightly lower than expected OMO clearing rate at the auction conducted by the CBN.


We witnessed a moderation in rates in the market, after the CBN re-offered the 1yr paper at a revised

OMO auction notice, whilst signaling to traders to place bids closer to the 12.25% level. Stop rates

however cleared higher at 12.88% on the 364-day bill and at 11.80% on the 175-day bill, due to weak

demand at the auction.

 

Bonds

The FGN Bond market remained bearish as risk off sentiments continued to dampen investors’ interests in the market. Yields consequently rose higher by c.15bps on the day, with further selloffs witnessed on the long end of the curve.

 

Selling interests have dominated the FGN Bond market in recent sessions, and we expect this trend to persist due to the risk off sentiments from investors, given the weakening global economic environment and uptick in short term T-bill rates offered by the CBN.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.38

13.98

0.21

16.39 27-Jan-22

14.49

13.82

0.59

12.75 27-Apr-23

14.42

13.96

0.17

14.20 14-Mar-24

14.33

13.93

(0.01)

13.53 23-Mar-25

14.24

14.12

0.07

12.50 22-Jan-26

14.38

14.00

0.02

16.29 17-Mar-27

14.39

14.16

0.00

13.98 23-Feb-28

14.50

14.24

0.05

12.15 18-Jul-34

14.44

14.24

0.07

12.40 18-Mar-36

14.71

14.40

0.26

16.2499 18-Apr-37

14.61

14.28

0.11

14.80 26-Apr-49

14.76

14.50

0.26



































Source: Zedcrest Dealing Desk


 

Treasury Bills

Yields in the T-bills market declined by c.30bps from the significant uptrend witnessed in the previous

session, following a lower than expected OMO clearing rate at the auction conducted by the CBN.

 

We expect yields in the market to remain slightly pressured, due to the continued offshore selloffs on

the short and mid tenured T-bill maturities, whilst funding for the CBN’s retail FX auction is expected to depress system liquidity levels in the money market tomorrow.


OMO Auction Result

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

84 day

Nil

20.00

5.89

No Sale

175 day

11.80

30.00

3.73

0.69

364 day

12.88

100.00

106.27

87.97

Source: CBN

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

13.80

12.20

0.30

3-Oct-19

14.00

13.50

0.00

14-Nov-19

10.90

8.75

0.00

5-Dec-19

13.85

11.50

(0.15)

2-Jan-20

13.50

12.00

(0.50)

6-Feb-20

13.50

12.30

(0.50)

19-Mar-20

13.25

11.90

0.00

2-Apr-20

13.30

12.50

(0.70)

14-May-20

12.80

12.20

(0.70)

04-Jun-20

13.00

11.70

(0.50)

02-Jul-20

13.00

11.85

(0.50)

Source: Zedcrest Dealing Desk


 

Money Market

Rates in the money market declined marginally by c.2pct, as system liquidity was bolstered by inflows from c.N123bn OMO T-bill maturities and refunds by the CBN for Unfilled Retail FX demand at the last auction. The OBB and OVN rates consequently ended the session at 11.71% and 12.64% respectively.

 

We expect rates to inch slightly higher tomorrow, as banks fund for another retail FX auction by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

11.71

13.86

Overnight (O/N)

12.64

14.64

Source: FMDQ, Zedcrest

 

 

FX Market

At the interbank, the Naira/USD rate remained unchanged at N360.90/$ (Spot) and N357.68/$ (SMIS). The NAFEX rate at the I&E window however reversed prior gains, rising by 24k to N363.46/$, as total traded volumes at the window spiked by 176% to a YTD high of $826m. At the parallel market, the cash rate rose by 20k to N358.00/$, while the transfer rate remained unchanged at N363.00/$.


 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

357.68

357.68

I&E FX Window

363.46

363.22

Cash Market

358.00

357.80

Transfer Market

363.00

363.00

Source: CBN, FMDQ, REXEL BDC

 


 

Eurobonds

The NGERIA Sovereigns weakened further in today’s session, as risk off sentiments persisted across the EM space. Traders remained better sellers across the NGERIA curve, with yields consequently rising further by c.15bps on the day.

 

The NGERIA corps were relatively quiet on our end, but we continued to see improved offers on most tickers.

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 


 

Proshare Nigeria Pvt. Ltd.

 


 

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