July 25, 2019/Zedcrest Capital
The Bond auction by the DMO was robustly over-subscribed by c.200%, with total subscriptions of N301bn against the N145bn offered. The allocations by the DMO were however underwhelming, with bid to cover at 3.46times the total sale of N86.82bn. Stop rates consequently cleared at 13.35%, 13.64% and 14.12% on the 5, 10 and 30yr bonds respectively, with the most yield decline witnessed on the 10-yr bond which recorded total sale of only N7.23bn of the N50bn offered.
Below are the trading activities in the fixed income and forex market today.
Treasury Bills
The T-bills market traded on a slightly bearish note with yields trending higher by c.30bps, due to the tight system liquidity levels and speculation for a renewed OMO sale by the CBN.
We expect the sell pressures to persist, with system liquidity expected to remain constrained towards weekend.
Money Market
Rates in the money market remained elevated, as system liquidity remained depressed at c.N30bn. The OBB and OVN rates consequently ended the session at 15.86% and 16.43% respectively.
We expect rates to moderate downwards tomorrow, due to expected inflows of c.N90bn from OMO T-bill maturities. This is however barring a renewed OMO sale by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 15.86 | 16.71 |
| Overnight (O/N) | 16.43 | 17.86 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD rate remained stable at N306.90/$ (Spot) and N357.70/$ (SMIS). The NAFEX closing rate at the I&E window also remained stable at N361.75/$, whilst the market turnover rose further by c.200% to $385m. At the parallel market, the cash and transfer rates remained stable at N357.50/$ and N361.50/$ respectively.
FX Market
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.90 | 306.90 |
| CBN SMIS | 357.70 | 357.70 |
| I&E FX Window | 361.75 | 361.75 |
| Cash Market | 357.50 | 357.50 |
| Transfer Market | 361.50 | 361.50 |
Source: CBN, FMDQ, REXEL BD
Eurobonds
There NGERIA Sovereigns rallied further, with prices lifted higher by as much as 1pct on the mid to long end of the curve. Yields were consequently lower by c.20bps on average.
The NGERIA Corps also rallied higher, with gains of more than 0.5pct witnessed across most traded tickers. The highest gains today were seen on the ACCESS 21s (112/113) and FIDBAN 22s (112.75/113.75)
