Markets Take a Breather as CBN Pauses on OMO


14/9/2018/Zedcrest Capital

***Nigeria’s inflation rises for first time in 18 months to 11.23 per cent*** – NBS


Indicator Value Commentary
Inflation 11.23% As at September 14, 2018, 9bps up from 11.14% recorded in July 2018.
MPR 14.00% Next MPC meeting scheduled for September 24 & 25, 2018
External Reserves $45.23bn As at September 13, 2018. A c.0.04% decrease from $45.25bn on Sept. 12, 2018
Brent Crude $78.49pb As at September 14, 2018. A c.0.09% decrease from $78.42pb on Sept. 13, 2018


Yields in the bond market moderated slightly in today’s session, as some of the sell pressures witnessed in the previous session quietened following absence of an OMO auction by the CBN today. The market however remained scantily traded, with only few buys seen on the 2027s and 2036s. Yields consequently compressed by c.4bps d/d, while they closed c.4bps higher w/w.

The market has continued to trend in a range in recent sessions, with investors favoring yields at these levels, and resistance still firm at c.15.50%. The recent increase in headline inflation however strengthens our outlook for a continued uptrend in yields. 

Secondary Market Bonds
Description Bid (%) Offer (%) Day Change (%)
15.54 13-Feb-20 14.69 13.89 (0.16)
14.50 15-Jul-21 15.39 15.21 0.02
16.39 27-Jan-22 15.17 14.81 (0.06)
14.20 14-Mar-24 15.15 14.99 (0.02)
12.50 22-Jan-26 15.24 15.11 (0.02)
16.29 17-Mar-27 15.26 15.10 (0.02)
13.98 23-Feb-28 15.28 15.20 (0.01)
12.15 18-Jul-34 15.51 15.27 (0.01)
12.40 18-Mar-36 15.47 15.39 (0.09)
16.2499 18-Apr-37 15.46 15.26 (0.04)

Source: Zedcrest Dealing Desk  

Treasury Bills

Yields in the T-bills market moderated slightly, with some Client demand flowing into the market due to absence of an OMO auction by the CBN. Market players however maintained a cautious outlook, hence a much quieter trading session it was, with significantly lesser volumes than in the previous session.

Market players will remain cautious in anticipation of the next OMO clearing rates by the CBN. With expectations of continued OMO interventions by the CBN, we expect rates to remain slightly pressured in the coming week.

Secondary Market Treasury Bills

Description Bid (%) Offer (%) Day Change (%)
4-Oct-18 14.55 13.50 (0.45)
1-Nov-18 14.15 13.80 (0.85)
6-Dec-18 14.50 13.50 (0.50)
3-Jan-19 14.00 13.00 (0.60)
14-Feb-19 14.00 13.35 0.00
14-Mar-19 13.20 12.80 (0.80)
4-Apr-19 14.00 13.00 0.00
18-Jul-19 14.00 12.50 0.00
1-Aug-19 14.00 13.10 0.00

Source: Zedcrest Dealing Desk 

Money Market

The OBB and OVN rates remained slightly pressured above single digits, closing today at 10.67% and 12.00% respectively. This came on the back of outflows for a retail FX auction by the CBN. System liquidity which opened the day at c.N675bn long is estimated to close the week at c.N400bn long, having taken into account estimated outflows for the FX auction debits, and inflows from coupon payments on the March 2024 bond.

We expect rates to remain slightly pressured going into the new week, with the CBN expected to maintain its pace of OMO and FX interventions in the market.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 10.67 10.33
Overnight (O/N) 12.00 11.08

Source: FMDQ, Zedcrest Research 

FX Market

The Naira/USD rate remained stable at the interbank, closing at N306.25/$. At the I&E FX window, a total of $223.45mn was traded in 273 deals, with rates ranging between N358.00/$ – N364.50/$. The NAFEX closing rate depreciated by c.0.09% to N363.18/$ from N362.78/$ previously.

At the parallel market, the cash rates appreciated by 20k to N359.50/$, while transfer rates remained unchanged at N361.50/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.25 306.25
CBN SMIS 359.85 359.85
I&E FX Window 363.18 362.78
Cash Market 359.50 359.70
Transfer Market 361.50 361.50



Investors continued to favor the NGERIA Sovereigns in today’s session, with earlier selloffs on the bonds looking to have reached a peak in recent sessions. Yields consequently compressed by c.25bps across the curve, in what turned out to be a mini rally on the day.

The NGERIA Corps were much quieter, with only slight interests seen on the Zenith 19s and UBANL 22s.

Proshare Nigeria Pvt. Ltd.


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