CBN Resumes OMO to Mop-up inflows from Maturing OMO bills

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Culled—Proshare

11/1/2018/@ZedcrestCapital

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Proshare Nigeria Pvt. Ltd.

Bonds

The bond market witnessed slight retracements of c.7bps in yields due to slight profit taking coming on the backdrop of a slowdown in demand. We however witnessed significant buys of c.N2bn on the 2027s bond towards the close of market, consequently lifting the bond to its previous day high of 13.34%. We expect the market to remain client driven in the near term, as market players stay cautious in anticipation of the Q1 FGN bond calendar release.

Proshare Nigeria Pvt. Ltd.

Treasury Bills

The T-bills market traded on a slightly bullish note, with most trades done on the 22-Feb, 22-Mar and 30-Aug bills, even as the CBN resumed its OMO auction selling a total of c.N245bn of the 26-Apr and 19-Jul bills at 12.60% and 14.40% respectively. Yields consequently declined by c.9bps across the curve. We expect the market to remain slightly bullish due to the surplus system liquidity.

 Proshare Nigeria Pvt. Ltd.

Money Market

The OBB and OVN rates fell to 7.33% and 8.25%, on the backdrop of inflows of c.N309bn maturing OMO T-bills which consequently increased the net system liquidity to c.N244bn from c.N180bn opening today. We expect rates to trend lower tomorrow, as market players anticipate inflows from retail FX refunds. This is however barring a significant OMO T-bill sale by the CBN.

Proshare Nigeria Pvt. Ltd.

FX Market

The CBN Official spot rate appreciated by 0.02% to N305.80/$ from its previous day rate of N305.85/$. Rates at the Investors and exporters FX window also appreciated by 0.08% to N360.43/$. Rates at the parallel market however depreciated by 0.06% to N361.80/$.

Proshare Nigeria Pvt. Ltd.

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