Fixed Income Report for 6th of June 2017

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The bond market was relatively active today with a bit of buying on the 2027 bonds at the start of the trading session. The market remained flat over the trading period with no significant trading witnessed on other bond maturities. This makes it 5days of consecutive flat trading session with little or no activity in the bond market. We expect another quiet trading session tomorrow as we do not foresee any renewed demand for FGN bonds.

We witnessed improved activity in the T-bills market today with slight demand on the short and medium end of the curve. The long end remained pretty quiet due to OMO T-bills floatation by the CBN . Yields declined marginally by 14bps across the entire yield curve.   We expect the market to remain client driven in the near term as we expect more supply of medium and long tenured T-bills via OMO auctions today. The liquidity conditions of the Money Market will also drive some activity in the Tbills space.

The OBB and O/N rates rose to 11.91% and 12.50% today as the CBN sold N18billion worth of OMO T-bills, further tightening liquidity in the market. Market liquidity is estimated at N8billion negative as at close of business today.  Interest rates are expected to trend northwards tomorrow as the CBN continues their liquidity tightening activities to tame the demand for FX and curb inflationary pressures.

The local unit opened at  NGN310.00/$1  and remained unchanged over the course of the trading session. Rates eventually closed at NGN305.55/$1 as the CBN injected some FX  liquidity in the market.  We expect the CBN to continue to intervene in the interbank market to calm the demand for FX.

FGN BOND CLOSING LEVELS    
Description Bid Yield (%) Offer Yield (%)
16.00 29-JUN-2019 16.45 16.35
15.54 13-FEB-2020 16.36 16.26
14.50 15-JUL-2021 16.44 16.34
16.39 27-JAN-2022 16.22 16.12
14.20 14-MAR-2024 16.08 15.98
12.50 22-JAN-2026 16.16 16.06
16.2884 24 MAR 2027 16.29 16.19
12.1493 18-JUL-2034 16.05 15.95
12.40 18-MAR-2036 16.02 15.92
TBILLS CLOSING LEVELS    
Maturity Bid Discount (%) Offer Discount (%)
31-Aug-17 17.45 17.15
30-Nov-17 18.65 18.40
3-May-18 18.55 18.30
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