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Significant Retracement in Bond Yields following NTB Calendar release by the CBN

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Friday, December 15, 2017 6:00PM / @ZedcrestCapital 

*** CBN releases Q1 2018 NTB Calendar***

***Plans to roll over all January – March maturities***

 Proshare Nigeria Pvt. Ltd.

 
Bonds

We witnessed further bearish retracements in the bond market today, following release of the Q1 2018 NTB calendar which revealed the DMO’s intentions to rollover all maturing NTBS from Jan - March 2018, contrary to some expectations for a cut in issuance volume.  Average bond yields consequently rose by 43bps in a panic driven session which saw most bonds trade about N1.00 - N2.00 away from their opening market prices, despite the relatively few number of trades consummated. We expect the market to open next week on a slightly weaker note, barring any renewed interest from clients. We however do not see yields going above a 14.50% mark in the near term.

 
Proshare Nigeria Pvt. Ltd.
 

 
Treasury Bills

The T-bills market was relatively quiet in today’s session, with most of the action witnessed on the short end of the curve, as some market players with excess liquidity positions looked to invest in some short dated maturities. The medium to long end of the curve was however slightly bearish in reaction to the NTB calendar release by the CBN. Average T-bills yields however fell by 34bps on the backdrop of some yield declines on the short end of the curve. We expect the market to open next week on a slightly bearish note, as market players relax their aggressive bullish stance from previous sessions.


Proshare Nigeria Pvt. Ltd.

 Money Market

The OBB and OVN rates inched slightly higher to close today at 3.75% and 4.33% from 1% closing levels the previous day. This came on the backdrop of system outflows for bond auction settlement and retail FX funding by banks. System liquidity however remains buoyant with an estimated closing figure of N500bn long. We however expect rates to close slightly higher on Monday, due to expected outflows for wholesale FX interventions by the CBN.

 Proshare Nigeria Pvt. Ltd.

 FX Market

The CBN Official spot rate remained stable at its previous day rate of N306.25/$. Rates at the Investors and exporters FX window however depreciated further by 30k to close at N360.96/$. Rates at the parallel market also depreciated by N1.00 to close at N363.00/$ 

 Proshare Nigeria Pvt. Ltd.

For more details email research@zedcrestcapital.com or call the dealing desk via 01-6311667 
 

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