Slight rallies on Local bonds as Nigeria Witnesses Significant Oversubscription on its Eurobond Offe

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Wednesday, February 16, 2018/6.30am/Zedcrest Capital

***Nigeria Sells $2.5 Billion of Eurobonds to Replace Naira Debt***

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Bonds

The bond market traded on a bullish note, with demand mostly on the longer tenured bonds 2034s - 2037s. This was following the significant oversubscription for the 12– and 20-yr Eurobonds offered by the DMO. FGN Bond Yields consequently declined by c.7bs, as traders anticipated a further decline in the domestic yield curve, following expectations of a cut in PMA issuance.  We consequently expect rates to maintain a downward trend in future sessions.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

Treasury Bills

The T-bills market traded on a relatively flat note, with a slight uptick of c.3bps in average yields, following continued OMO issuance by the CBN and anticipations of significant liquidity outflows for retail FX funding by banks. We expect yields to tick slightly higher tomorrow, due to expected tightening in system liquidity.

 

 Proshare Nigeria Pvt. Ltd.


Money Market

The OBB and OVN rates declined slightly to 6.67% and 6.92%, respectively. This was following inflows of c.N90bn in OMO maturities which helped offset OMO sales outflows of c.N57bn, consequently maintaining system liquidity at c.N260bn positive. We however expect rates to trend higher tomorrow due to expected funding for retail FX bids by banks.

 

Proshare Nigeria Pvt. Ltd.

FX Market

The CBN Official spot rate depreciated by 0.02% to N305.95/$ from its previous day rate of N305.90/$. Its external reserves is however recorded to have improved by 1.71% to $41.47bn as at 15th of February, 2018.

The spot rate in the Investors and Exporters’ FX Window appreciated by 0.07% to close at N360.13/$ from N360.37/$ in the previous session.

Rates in the Unofficial market also appreciated by 0.03% to N361.30/$.

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