Renewed demand witnessed on T-bills as CBN Suspends OMO sales

Culled—Proshare

December 4, 2017/@ZedcrestCapital 

*** Nigeria’s debt service ratio falls to 45%***- Adeosun
 

KEY INDICATORS

Inflation 15.91% Declined by 0.07% in October from 15.98% in September 2017
MPR 14.00% Left unchanged at 14.00% at the MPC meeting of November 2017
External Reserves $34.82billion Accreted 2.02% as at 29th November from $34.67bn on 28th November 2017
Brent Crude $62.89pb Fell by 0.45% from $63.17pb on 30th November 2017

Bonds

The bond market was scantily traded today, but with mixed sentiments, as slight sell on some short tenured bonds (19s – 24s) were offset by some buys on some longer tenured maturities (27s – 37s) later in the day. Average bond yields consequently stayed flat at 14.71%. We expect some client demand to flow into the bond space tomorrow.

Benchmark FGN Bond Yields
Description Bid (%) Offer (%) Day Change (%)
16.00 29-Jun-19 14.98 14.91 0.11
15.54 13-Feb-20 14.89 14.82 0.13
14.50 15-Jul-21 14.94 14.87 0.03
16.39 27-Jan-22 14.41 14.34 (0.05)
14.20 14-Mar-24 14.81 14.74 (0.01)
12.50 22-Jan-26 14.84 14.77 0.01
16.29 17-Mar-27 14.85 14.78 (0.03)
12.15 18-Jul-34 14.46 14.39 (0.08)
12.40 18-Mar-36 14.40 14.33 (0.10)
16.25 18-Apr-37 14.55 14.48 (0.01)

Source: Zedcrest Dealing Desk  

Treasury Bills
The T-bills market was slightly bullish, with demand witnessed on some medium tenured bills (May/June), as the CBN suspended its regular OMO interventions today.  Average T-bills yields consequently declined by 12bps. We expect the market to remain slightly bullish tomorrow, as market players closely watch the monetary policy actions of the CBN. 

Benchmark Treasury Bills Rates
Description Bid (%) Offer (%) Day Change (%)
4-Jan-18 16.50 16.25 (0.15)
1-Feb-18 17.50 17.25 0.00
1-Mar-18 15.40 15.15 0.00
5-Apr-18 16.80 16.55 (0.10)
3-May-18 17.00 16.75 (0.55)
14-Jun-18 17.00 16.75 (0.40)
5-Jul-18 17.30 17.05 (0.15)
2-Aug-18 16.75 16.50 0.00
20-Sep-18 15.30 15.05 0.00
4-Oct-18 15.25 15.00 0.00
1-Nov-18 15.60 15.35 0.00

Source: Zedcrest Dealing Desk 

Money Market

System Liquidity is estimated to decline further to c.N250bn short due to the FX interventions by the CBN estimated at c.$210million. The OBB and OVN rates however declined slightly to 21.50% and 23.33% as the CBN did not hold an OMO auction, contrary to expectations in the market. We expect rates to be largely driven by the CBN’s liquidity management actions in the near term. 

Money Market Rates
Current (%) Previous (%)
Open Buy Back (OBB) 21.50 25.83
Overnight (O/N) 23.33 29.08

Source: FMDQ, Zedcrest Research  

FX Market

The CBN Official spot rate depreciated sharply by N1 to N307.00/$ from its previous day rate of N306.00/$, even as the CBN intervened to the tune of $210million (est.) in the wholesale, SMEs and invisibles segments of the interbank market. Its external reserves is however recorded to have improved by 2.02% to $34.82bn as at 29th November 2017. Rates at the Investors and exporters FX window closed at N360.32/$ from N360.65/$ in the previous session. Rates at the parallel market also depreciated by 20k to N361.50/$. 

FX Rates
Current (N/$) Previous

(N/$)

CBN Spot 307.00 306.00
CBN SMIS 330.00 330.00
I&E FX Window 360.32 360.65
Parallel Market 361.50 361.30

Source: CBN, FMDQ, REXEL BDC 

opan



investadvocate