Fixed Income Market Monitor – Average Money Market Rate Decreased Marginally By 1.50%

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Monday, July 9, 2018 / 12:30PM /Anchoria AM Research

 
The money market rate decreased slightly last week as the Overnight rate (OVN) and Open Buy Back rate (OBB) fell to 12.92% and 11.33% respectively. Consequently, the average money market rate decreased marginally by 1.50% to settle at 12.13% as system liquidity is estimated to have increased to c. N200bn, following OMO T-bill maturities and Net PMA repayments (cN309.85bn) and inflow from refund of last auction (cN80bn). 

We expect rates to inch up slightly next week barring inflow from FAAC and FX sales in Wholesale, invisibles and SME on Monday. 

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 Forex: USD/NGN 

The CBN Official rate fell by 0.02% during the week to close at N305.70$ while the rate in the Investors and Exporters’ FX Window rose by 0.35% to close at N362.58/$. Naira at the parallel market remained unchanged to close at N361.00/$ (using the Everdon BDC Rate). 

We expect rates in the parallel market to remain constant as the apex bank continues to supply FX into the market at a reduced rate and funds remain easily accessible through the NAFEX window.

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Commodities:
 

Following the 20-cent reduction during the week under review by Saudi Aramco, (Saudi Arabia’s State-owned Oil company), in key crude oil grade to Asian, European and US markets, the WTI Crude Oil fell by 0.47% to close at $73.80 per barrel. 

This is the first cut in four months since the crude oil price reached its peak in July 2014 and matched the expectations of four traders in a Bloomberg Survey. 

Fixed Income 

Bond 

Bearish sentiments were witnessed in the bond market last week as yields increased across all tenor with sell off more pronounced on the 2034 and 2037 bonds. The average yield in the bond market rose by 25bps to close the week at 13.91%. 

However, the bond market was relatively quiet last week as the total number of transactions and value fell to 382 and N150.7 billion respectively from 399 and N202.3 billion respectively in the previous week. 

Secondary Market  

Treasury Bills

Due to relatively buoyant system liquidity during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell by 58 bps to close the week at 12.39%. Market activities was relatively active as value of transactions rose to N1.01 trillion from N807.7 billion in the previous week. 

The Treasury Bill Primary Market Auction held during week witnessed 89.35% subscription as the 364 days bill was undersubscribed by 21.80% while 91 days and 182 days bills witnessed 197.01% and 100.18% subscription respectively.

 

Primary Market Auction Result – 04 July 2018

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Secondary Market

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