Slight Rally on Bonds on Prospective Eurobond Issuance by the DMO

Proshare

Thursday, January 25, 2018   10.17PM /Zedcrest Capital

***Nigeria Plans $2.5 Billion Eurobond Sale in First Quarter to Refinance Domestic Debt***

***Seeks to return to JPMorgan’s local-currency bond index***

 Proshare Nigeria Pvt. Ltd.

Bonds

The Bond market opened on a relatively calm note, following the relatively moderate results from the previous day’s auction. The market however turned bullish as updates from an interview granted by the DMO Chief filtered into the market, fueling some panic buys especially on the long end of the curve, with the 2037s bond the most hit, (traded as low 13.00%). Yields however retraced slightly from their intra-day highs, to close c.11bps lower than their previous day levels, as market players shrugged off the initial anxiety following the press release. We expect continued demand, but on a more moderate tone, as market players asses the relative impact of the DMO’s prospective decisions.


Proshare Nigeria Pvt. Ltd.

 

Treasury Bills

The T-bills market was relatively quiet, but traded on a slightly bullish note, declining by c.10bps from previous day levels, as the regular OMO auctions by the CBN remain a strong anchor keeping yields at c.15% levels. We expect the market to trade tomorrow on a slightly bullish note, with anticipated inflows from FAAC payments expected to ease system liquidity.

Proshare Nigeria Pvt. Ltd.

 

Money Market

The OBB and OVN rates remained relatively unchanged from its previous day’s levels, closing at 14.67% and 15.50%. We expect rates to trend downwards tomorrow, possibly to single digit levels, as inflows from FAAC payments are expected to more than offset outflows for bond auction settlement. The above is however barring a significant OMO sale by the CBN


Proshare Nigeria Pvt. Ltd.

 

FX Market

The CBN Official spot rate depreciated by 0.02% to N305.65/$, from its previous day rate of N305.60/$. Rates at the Investors and exporters FX window also depreciated by 0.08% to N360.54/$. Rates at the parallel market however stayed flat at N363.00/$.

Proshare Nigeria Pvt. Ltd.

 

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