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DMO Slashes Q2 NTB Offer in Half as FX reserves hit $46bn


Monday, March 12, 2018 /10:30 PM /Zedcrest Capital

*** Nigeria’s external reserves hit $46 billion***– CBN

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The bond market traded on a bullish note with significant interests on some short tenured maturities (20s - 24s) and some buys on the 2027s as well, taking yields lower by c.4bps across the curve. This demand is most likely due to lower inflation rate expectations by market players. The short end were the most lifted, due to the relatively more attractive yields on them. We expect a further decline in yields tomorrow, as market players react to the cut in PMA issuance as shown in the Q2 NTB calendar published by the CBN.


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Treasury Bills

The T-bills market also traded on a slightly bullish note with yields declining by c.7bps on average. This was despite the continued OMO auction by the CBN, with a total sale of N51m and N88bn on the 87- and 227-day bills respectively. We expect the bullish sentiments to become much stronger in tomorrow’s session, especially on the short and medium tenured bills, on the back of the cut in PMA. This should however be moderated by a significant OMO Auction by CBN, especially if a longer dated bill is offered.


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Money Market

The OBB and OVN rates rose to 13.67% and 14.67% respectively. This came on the backdrop of a squeeze in system Liquidity, following the OMO (N89bn) and FX sales ($210m) by the CBN. System Liquidity is consequently estimated to close today at c.N23bn positive. We expect rates to be slightly moderated tomorrow, on the back of expected inflows from retail FX refunds to banks. This is however barring a significant OMO sale by the CBN.


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FX Market

The Interbank rate declined by 0.02% to N305.75 from its previous rate of N305.80/$, as the CBN intervened to the tune of $210m to satisfy demand in the Wholesale, SMEs and invisibles segment of the market. The CBN’s external reserves is also recorded to have improved by 1.60% to $43.73bn as of 9 March, even as the CBN stated its gross unpublished reserves figure to have hit a high of $46bn, most likely due to inflows from the FG’s Eurobond sales.

The NAFEX rate depreciated slightly by 0.04% to close at N360.47/$ from N360.32/$ in the previous session. The Total volume traded however shot up significantly by 239% to a YTD high of $632m. The cause is not yet known as of the time of this report.

Rates in the Unofficial market also depreciated by 0.06% to N361.20/$, as the greenback become more expensive on resumption of the Chinese traders from a fortnight break

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The NGERIA Sovereigns stayed relatively quiet as most local and offshore players shifted focus to the Seplat Eurobond Launched in today’s session.

The Seplat Eurobond Launch witnessed a total subscription of $675m out of which a total of $350m were sold to investors at 9.50% yield—a successful one indeed, just as we witnessed some grey trades on the bond in 0.625c/1pts area, with some offers as high as  +1.375pts, though no hits at those levels yet.

We witnessed two-way movements in the FBNNLs, as market players weighed on an anticipated judgement debt against the bank. Investors sold off on the Fidbanks, while they demanded for more of the Diambks19s and Ecotra 21s, with some lifts on both. 

Information on all Nigerian bonds is available here

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