Daily update on Treasury Bills, Bonds, Forex etc.

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Bond Yields Compress on Renewed Local Client Demand

CBN boosts wholesale forex market with $210m

KEY INDICATORS

Bonds

The bond market traded on a slightly bullish note with yields compressing by c.21bps on average. This came as market players improved their bids across the curve following renewed demand from local clients mostly on the 2027s, 2036s and 2037 bonds.  We expect the market to be largely client driven in the near term, even as we have witnessed a slowdown in offshore selling interests in recent sessions.

Treasury Bills

The T-bills market traded on a slightly bullish note, with yields compressing by c.10bps, following some demand mostly on the 4-Oct-18, 3-Jan-19 and 14-Feb-19 benchmark T-bill maturities in anticipation of OMO and PMA maturities on Thursday.  The CBN will conduct a PMA auction tomorrow with a total of c.N171bn on offer. We expect rates to clear slightly higher (c.10bps) than previous levels due to the increased volumes on offer.

Money Market

The OBB and OVN rates fell by c.10bps to 19.33% and 20.08% respectively, as there were no significant funding pressures in the system. System liquidity is consequently estimated at c.N80bn positive, following estimated deductions (c.N70bn) for wholesale FX sales funded in the previous session. We expect rates to maintain a slightly downward trend, as market players anticipate inflows from FAAC and OMO maturities to further ease funding pressures in the system.

FX Market

The Interbank rate remained stable at its previous rate of N305.75/$. The I&E FX rate appreciated slightly by 0.03% to N361.28/$. In the parallel market, cash rates appreciated by N1.00 to N359.00/$, while the transfer market rate remained stable at N364.00/$.

Eurobonds:

We witnessed renewed demand in the NGERIA Sovereigns, with yields compressing by c.6bps on average. The most demand were on the 2030s and 2047s which gained +0.75pt and +0.60pt, consequently recovering from their previous day downturn.

The NGERIA Corps posted slight gains on most of the trade tickers, with the most gains seen on the DIAMBK 19s, FBNNL 21s and UBANL 22s. We however witnessed slight sell on the FIDBAN 22s which is now down by –0.50pt to 97.50 (11.24%).