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Slight Reversal in Bond yields as CBN holds off on OMO ahead of T-bills PMA

Proshare

Tuesday, April 3, 2018 /10:30 PM/Zedcrest Capital

***Stakeholders See No Rate Easing As MPC Members Meet***

 Proshare Nigeria Pvt. Ltd.


Bonds

The bond market witnessed slight reversals from its bearish trend in the previous week, as market players cherry-picked on some high yielding bonds consequently compressing the curve by c.11bps on average. We however note that the yield movements were hinged on relatively thin volumes and as such, were largely speculative, with no much demand observed from real money clients. We expect the market to be relatively muted tomorrow, as market players anticipate the results of the MPC meeting, for which a status-quo decision is widely anticipated.


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Treasury Bills

The T-bills market traded on a bullish note with yields declining by c.25bps on average. This came on the backdrop of the boisterous system liquidity coupled with the lack of an OMO auction by the CBN. We expect the market to remain slightly bullish, due to expected spill over demand from the PMA scheduled to hold tomorrow, coupled with the favorable system liquidity and expected absence of an OMO auction until possibly on Thursday when we have c.N325bn worth of maturing OMO bills.

 

 
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Money Market

The OBB and OVN rates fell to 3.33% and 4.42%, as there were no significant funding pressures in the system. System Liquidity is however estimated to decline slightly to c.N380bn positive, due to outflows for wholesale and other FX SMIS by the CBN. We expect rates to remain relatively stable tomorrow, as there are no significant outflows expected from the system.

 

 

 Proshare Nigeria Pvt. Ltd. 

 

 

FX Market

The Interbank rate remained stable at its previous rate of N305.65/$, even as the CBN intervened in the market to the tune of $210m in the wholesale, SMEs and Invisibles segments. The NAFEX rate remained relatively stable to close at N360.21/$, while rates in the Unofficial market also remained stable at N361.20/$.

 

 Proshare Nigeria Pvt. Ltd. 

 

Eurobonds

The NGERIA Sovereigns were slightly bullish in today’s session, with yields compressing by –5bps on average. We witnessed most demand on the 30s and 38s as in the previous sessions following their inclusion in the EMBI.

 

The Nigerian banks were mostly bearish, with slight sell witnessed across most of the traded tickers with exception of the FBNNL 20s, Access 21s Sub and Zenith 22s. Investors were mostly bearish on the UBANL and FIDBAN 22s. The SEPLLN 23s however improved slightly and was last traded a 99.80 (+0.5pt). 

 

 

 Proshare Nigeria Pvt. Ltd.

 

 

 

 Proshare Nigeria Pvt. Ltd.

 

 

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14.   Bond Yields Decline as Auction rates clear c.35bps lower on the 5- and 10-yr

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16.   Ahead of Next T-bills Auction Scheduled 21st March, 2018

 

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