As OMO Rates Remained Unchanged, Nigerian Fixed Income Market stays calm ahead of MPC meeting

 

 

By Zedcrest Partners Ltd

 

*** World Bank in Talks with Nigeria for Fresh $2.5 Billion Loan ***

 

 

Bonds

The Bond market sustained bullish sentiments, albeit at a reduced tempo in today’s session. We noted improved bids at the short- to mid-end of the curve, while the yields at the long-end expanded. Yields consequently closed the session lower by c.3bps on the average across the FGN benchmark curve.

We expect a muted trading session tomorrow, as the market looks to the outcome of Monetary Policy Committee’s meetings.

 

Treasury Bills

The T-bills market closed the trading session on a calm note, as market focus remained on the OMO sale by the CBN. Yields expanded by c.1bps on the average across the benchmark NTBills curve to close the trading session.

 

At the OMO auction, the CBN bank sold a total of c.N351.08bn across three tenors to roll over maturities of c.N356.50bn. The stop rates maintained across the 91-, 182- & 364-day tenors. With healthy demand at 1-yr bill on offer (bid-to-cover ratio of 2.46X), the Apex bank prorated supply to investors to sell a total of N350bn.

 

With the CBN’s tight grip on system liquidity, we expect yields to oscillate in tandem with system liquidity levels.

 

Money Market

Money Market rates closed today’s session higher as system liquidity remains tight following an OMO auction floated by the CBN. System liquidity opened at c.N39bn positive, as the CBN mopped up the entire OMO maturities, offering little reprieve to interbank funding rates. OBB and OVN rates consequently ended the day higher at 16.86% and 18.07% respectively.

 

We expect money market rates to remain elevated to close the week amidst tight liquidity.

 

FX Market

At the interbank, the Naira/USD spot and SMIS rates remained stable to close at N306.90/$ and N358.02/$ respectively. At the I&E window, the closing rate for the Naira appreciated by 10k to close the trading session at N362.26/$.

At the parallel market, the cash rate depreciated by 40k to close at N358.00/$, while the transfer rate remained at N362.50/$.

 

Eurobonds

A surprisingly quiet session for the NGERIA Sovereigns despite the US FED rate cut and positive gains in global oil prices. Yields remained stable on the average across the sovereign curve, as the uptick on the NGERIA 2025 was tempered by slight gains across the other tracked papers.

The NGERIA Corps also saw improvements in today’s trade session, with average gains of c.3bps across the tracked papers.

Contact us:

Dealing Desk: 01-6311667 Email: research@zedcrestcapital.com

Disclaimer:

Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment advice or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision

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