Wednesday, May 09, 2018 07:00 PM/Zedcrest Capital
***Senate to pass major oil reforms by July*** - Saraki
The bond market traded with volatile swings, as spreads widened across the curve on fears of continued selloff by offshore. The Medium to long end of the curve remained weak, with the 22s also taking some hit on the shorter end. Yields consequently rose by c.10bps across the curve. We however note a slowdown in selling pressures and consequently expect some pullback in yields due to renewed buying interests from clients at current levels.
The T-bills market remained bearish, with yields rising higher by c.30bps. This came as market players repriced their quotes in anticipation of an OMO auction by the CBN tomorrow. We expect the market to remain bearish on the back of expectations of a marginal hike in the OMO auction stop rate as in the past two auctions. There are however fears of a significant under allotment and proration of bids, which could fuel renewed buying interests in the secondary market.
The OBB and OVN rates inched slightly higher to 7.08% and 7.75% respectively, following outflows of c.N50bn for wholesale FX settlement which compressed system liquidity to c.N180bn positive. We expect rates to remain relatively stable tomorrow, as inflows from OMO maturities (c.N273bn) are expected to offset outflows for the expected OMO auction sales.
The Interbank rate remained stable at its previous rate of N305.75/$, with the CBN’s external reserves recorded to have improved by 1.52% to $47.80bn as at 7-May. The NAFEX rate depreciated by 0.14% to a four month high of N361.14/$. Rates in the Unofficial market however remained stable at N361.40/$.
The NGERIA Sovereigns remained significantly bearish, with selloffs mostly on the long end of the curve (38s and 47s) which lost -1.50pt on average. Yields consequently rose by c.20bps, with the 2047s trading closer to 8% (Last Trade at 7.95%).
The NGERIA Corps remained bearish across most traded tickers, with investors mostly bearish on the Zenith and UBANL 22s which lost –0.80pt. The FIDBAN 22s and SEPLLN 23s were also sold slightly, loosing –0.25pt.