Fixed Income Daily Market Update – 9th June 2017

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We witnessed renewed interest in FGN bonds during yesterday’s trading session with demand largely driven by offshore clients . The 2022s, 2024s and 2036s bonds witnessed the most patronage with yields compressing by 5bps across the yield curve.  We expect the demand to continue today, however at a slow pace as we approach this month’s FGN bond auction.

The T-bills market traded on a bearish note with intense selloff witnessed especially on the short end of the curve . This was as a result of tight market liquidity coming from FX intervention  and OMO T-bills sales  by the CBN. Yields increased by 56bps across the yield curve. We expect the bearish trend to continue today as the illiquidity in the Money Market persist.

The OBB and O/N rates rose higher to close at  78.33% and 81.67% yesterday as the CBN sold N16.7bn of OMO T-bills, further tightening liquidity in the Market. Market Liquidity is estimated at N70billion negative as at close of business yesterday. We expect interest rate to remain elevated closing the week as we do not expect any significant inflows to bolster systemic liquidity

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 16.47 16.37
15.54 13-FEB-2020 16.39 16.29
14.50 15-JUL-2021 16.34 16.24
16.39 27-JAN-2022 16.08 15.98
14.20 14-MAR-2024 15.92 15.82
12.50 22-JAN-2026 16.08 15.98
16.2884 24 MAR 2027 16.27 16.17
12.1493 18-JUL-2034 15.98 15.88
12.40 18-MAR-2036 15.95 15.85
TBILLS CLOSING LEVELS
Maturity Bid Discount (%) Offer Discount (%)
31-Aug-17 18.10 17.85
30-Nov-17 18.60 18.35
3-May-18 18.40 18.15
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