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Parallel Market Rates to Appreciate Further as CBN approves Dollar Sale to BDCs

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Monday, June 4, 2018 / 07:20 PM / Zedcrest Capital

***CBN Sells $155m to Boost FX Liquidity***

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Bonds

The bond market traded on a slightly bearish note, with some sell mostly on the 2034s and 2037s. Yields consequently rose by c.6bps on average, as traders maintained a relatively risk off posture, especially on the longer tenured maturities. We expect the market to trade on a relatively flat note in the near term as market players await direction on evolving macro indicators including assent to 2018 appropriation bill by the executive and its attendant funding implications.


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Treasury Bills

The T-bills Market traded on a relatively flat note as the CBN once again intervened in the Market via an third consecutive OMO auction to Mop up excess system liquidity estimated at c.N420bn at open of the day. Market players however continued to undersubscribe the OMO, with only c.N41bn sold of the N350bn on offer. We expect yields to remain relatively flat, as the CBN is expected to maintain a tight stance on Liquidity.

 

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Money Market

The OBB and OVN rates remained relatively stable, closing at 3.92% and 4.58% respectively, as system liquidity remains buoyant at c.N380bn despite the OMO auction sales today. We expect rates to remain relatively stable at these levels, barring a significant liquidity management action by CBN.

 

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FX Market

The Interbank rate remained stable at its previous rate of N306.00/$, as the CBN intervened in the market to the tune of $155m for wholesale, SME and Invisible transactions. The I&E FX rate depreciated by 0.07% to N361.12/$. Rates in the Cash market appreciated further by 20k to N361.50/$, as the CBN approved a decision to lower its sale rate to BDCs to N357.00/$ from N360.00/$. The transfer market rate also appreciated by 50k to N364.50/$ .

 

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Eurobonds:

The NGERIA Sovereigns recovered slightly from the bearish sentiments witnessed towards the end of the previous week, with modest gains posted on the 2032s and 2047s especially, which  rose by +0.70pt and +0.80pt respectively.  The 2027s also recovered +0.50pt, having last traded at 98.20, now 97.95/98.65.

 

The NGERIA Corps were however bearish across most traded tickers, with the heaviest loses witnessed on the Zenith 22s and FIDBAN 22s which lost –0.40pt and –0.60t respectively. The SEPLLN 23s however posted marginal gains of +0.25pt, having last traded at 100.15, now 99.90/100.60.

 

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

 

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3.       CBN sells c.N560bn T-bills to Moderate Excess Inflows from OMO T-bill Maturities

4.       Bond Yields Compress as N300bn Bond Maturity hits System

5.       Naira Strengthens in Parallel Market as CBN takes Measures to improve Dollar Liquidity

6.       Bond Yields Compress on Demand from upcoming Bond Maturity

7.       Funding Rates Crash to Single Digits as OMO Inflows Bolster System Liquidity

8.       Summary of May 2018 FGN Bond Auction

9.       Weak Auction Results Dampen Bond Market Outlook

10.   Bond Market Reverses Prior Session Loss ahead of Auction

11.   Bond Yields Tick Higher as GDP Growth slows in Q1 2018

12.   Offshore Sellers Move Bond Yields higher ahead of CBN MPC Meeting

13.   Market Players Under-subscribe CBN OMO due to System Liquidity Strain

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