DAILY MARKET REPORT: FIXED INCOME, MONEY MARKET AND FX – JULY 27 2017

“News Update:
A week after the Paris Club refund was disbursed, the three tiers of government yes- terday shared a windfall of N652.229 billion as statutory revenue for this month. Of the N652.229 billion shared, the Federal Government got the lion share of N286.650 billion, states-N178.619 billion and local government councils-N134.927 billion. Oil producing states got N29.894 billion as 13 per cent derivation. – The Nation”

“The bond market was bullish today in reaction to the status quo stance of the MPC. Yields on most maturities experienced slight retracements with a marginal decline of 2bps across the curve. We expect demand to filter into the market tomorrow as market players seek to reinvest proceeds from FGN bond maturities and coupon payments of N70billion.

The T-bills market traded on a slightly bullish note with demand skewed towards the short end (-11bps average). The medium and long end were scantily traded as the CBN continued with its OMO auction in today’s ses- sion. The CBN sold a total of N160million (190day) and N74.51billion (344day) OMO bills with rates maintained at 17.95% and 18.55%. We expect the market to remain bullish tomorrow on the backdrop of ex- pected cash inflows into the money market.

The OBB and O/N rates eased slightly to 15.17% and 16% despite an esti- mated decline in market liquidity to about N77billion negative. There is a possibility that commercial banks funded their deficits at cheaper rates from the CBN’s SLF window which moderated the funding rates. We ex- pect rates to trend southwards tomorrow due to expected inflows from bond maturity and coupon payments (N70.59billion), OMO maturities (N65billion) and FAAC disbursements of c.N313billion.”