Fixed Income Report for 7th of June 2017

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The bond market opened on a relatively flat note with slight demand observed on the 2022 and 2036 bonds. However, during the course of the trading session, we saw market sell off the 2036 bonds as yields on that maturity trended below the 16% mark. Consequently bond yields closed on a flat note which has been the trend for the past 2 weeks due to weak appetite for bonds We expect the market to continue trading on a quiet note as we await the FGN bond calendar for June 2017 which we expect to be released before the end of next week.

The T-bills market continued on a bullish note today with demand observed on the medium and long end of the curve, largely driven by demand from institutional clients. Consequently, yields declined by 20bps 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 tomorrow.

The OBB and O/N rates rose to 25.00% and 27.50% today as the CBN sold N13.5billion worth of OMO T-bills. The naira debit of several FX interventions by the CBN further tightened liquidity in the market. Market liquidity is estimated at N73billion positive as at close of business today.  Interest rates are expected to trend southwards tomorrow as we expect increased liquidity from the N73.6billion OMO T-bills maturing tomorrow. However we still expect the CBN to continue with its liquidity tightening activities via further OMO and FX auctions.

The local unit opened at  NGN310.00/$1  and remained unchanged over the course of the trading session. Rates eventually closed at NGN305.60/$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 16.46 16.36
15.54 13-FEB-2020 16.36 16.26
14.50 15-JUL-2021 16.44 16.34
16.39 27-JAN-2022 16.17 16.07
14.20 14-MAR-2024 16.05 15.95
12.50 22-JAN-2026 16.13 16.03
16.2884 24 MAR 2027 16.29 16.19
12.1493 18-JUL-2034 16.02 15.92
12.40 18-MAR-2036 16.01 15.91
TBILLS CLOSING LEVELS
Maturity Bid Discount (%) Offer Discount (%)
31-Aug-17 17.60 17.35
30-Nov-17 18.45 18.20
3-May-18 18.40 18.15
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