Money Market Rates Crash As FAAC Inflows Bolster Liquidity


By Zedcrest Partners Ltd


*** Apex Bank Maintains Benchmark Rates At MPC Meeting ***



The bullish run in the Bond market slowed in today’s session, as the Monetary Policy Committee meeting took center stage. Spreads tightened in the market, as yields closed the session lower by c.6bps on the average on the FGN benchmark curve.


We anticipate a slight retracement in yields in the coming week, as market participants price in supply coming from the monthly FGN Bond auction scheduled for Wednesday, September 25, 2019.


Treasury Bills

The T-Bills market also trading on a muted note with focus on the MPC meeting outcomes, yields across the benchmark NTBills curve compressed by c.1bp on the average. We noted sustained demand for long-dated securities, especially September 2020 maturities, as participants covered for prorated volumes at the OMO auction held the previous day.


With monthly statutory inflows improving system liquidity this week and OMO maturities of c.N422.05bn expected in the coming week, we maintain our cautious outlook for T-bills at current yields as we expect the Central Bank to float multiple OMO auctions to check liquidity levels.


Money Market

System liquidity opened the trading session tight at c.N40bn positive, causing money market rates to open at 15.00% levels. However, inflows from monthly FAAC disbursements later in the day eased funding pressures. OBB and OVN rates consequently closed the week lower at 6.43% and 7.57% respectively.


With funding pressures from Retail & Wholesale FX and FGN Bond auctions expected in the coming week, we anticipate a rise in money market rates to close out the week.


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 depreciated by 13k to close the trading session at N362.39/$.

At the parallel market, the cash and transfer rates remained stable to close the week at N358.00/$ and N362.50/$.



The NGERIA Sovereigns closed the week on a positive note, as we noted renewed demand for the sovereign papers during today’s session. Yields compressed by c.8bps on the average across the sovereign curve, with the mid-dated papers recording the most gains.

The NGERIA Corps sustained gains for a second consecutive trading session. We noted particular buy interests on the FIDBAN 2022s & ETINL 2024 which gained +12bps and +7bps respectively.


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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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