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Slight uptick in Bond Yields amid Profit Taking on the 10-yr

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Wednesday, December 27, 2017 7:00PM / @ZedcrestCapital 

*** High cost, interest rate responsible for fuel scarcity***- DSDP

  Proshare Nigeria Pvt. Ltd.

Bonds

The bond market opened today on a relatively calm note, but turned slightly bearish towards the end of trading, due to some profit taking on the 10-yr (2027) bond which caused yields to rise by about 6bps across the curve. The 20-yr (2037) bond however witnessed slight buying interest, with its yield compressing by 5bps to 13.66%. Average bond yields consequently rose to 13.91%, with bids on some maturities rising above the 14% mark. We expect a quiet trading session tomorrow, but with slight retracements expected at these levels, barring any continued year-end profit taking by clients.

Proshare Nigeria Pvt. Ltd. 

Treasury Bills

The T-bills market traded on a relatively flat note with very few buys on some short and medium tenured maturities, as market players continued to invest their surplus liquidity at the CBN’s OMO auction. The CBN offered a total of 200bn 92- and 267-day OMO bills, but sold only 47.5% (N95bn) of the total offer, which was the total amount subscribed for by market players. We do not expect any significant trading activities in subsequent sessions, as traders look to close their books for the year.

Proshare Nigeria Pvt. Ltd.
 

Money Market

The OBB and OVN rates remained relatively stable to close today at 5.00% and 5.75%, with system liquidity still estimated to close on a positive of note of c.N50bn despite the OMO auction and wholesale SMIS by the CBN. We expect rates to decline further tomorrow, due to expected inflows from OMO T-bill maturities (N218bn) and retail FX refunds by the CBN.

 Proshare Nigeria Pvt. Ltd.

 

FX Market

The CBN Official spot rate appreciated by 0.02% to close at N306.10/$ from its previous day rate of N306.15/$. Rates at the Investors and exporters FX window appreciated by 0.03% to close at N360.70/$. Rates at the parallel market however remained stable at N363.50/$.

Proshare Nigeria Pvt. Ltd.

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