Weak Auction Results Dampen Bond Market Outlook

Framework for $2.5bn China currency swap coming next week— CBN


Inflation 12.48% Declined by 0.86% in April from 13.34% in March 2018
MPR 14.00% Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018
External Reserves $47.75billion Fell by 0.10% as at 21 May from $47.80bn as at 18 May 2018
Brent Crude $79.09pb Fell by 0.65% from $79.61pb on 21 May 2018



The Bond Market traded with mixed sentiments as market players sold off on the shorter end of the curve (19s and 20s) whilst there were slight interests on the medium to long end. Yields consequently rose higher by c.6bps on average.

The results of the FGN Bond Auction for today indicated a weak auction with an average bid-to-cover of just 1.78x (minus non-competitive bids), even as the stop rates rose significantly higher by c.70bps from their previous auction rates.

We expect a slight uptick in yields in response to results of the auction tomorrow.


FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
16.00 29-Jun-19 12.45 11.49 0.58
15.54 13-Feb-20 12.77 12.42 0.26
14.50 15-Jul-21 13.50 13.38 (0.08)
16.39 27-Jan-22 13.47 13.32 (0.01)
14.20 14-Mar-24 13.50 13.30 0.01
12.50 22-Jan-26 13.49 13.25 (0.03)
16.29 17-Mar-27 13.42 13.39 (0.05)
12.15 18-Jul-34 13.43 13.29 (0.01)
12.40 18-Mar-36 13.40 13.29 (0.04)
16.25 18-Apr-37 13.41 13.32 (0.04)

Source: Zedcrest Dealing Desk

FGN Bond Auction Results
Maturity Rate (%) Offer (N’bn) Sub (N’bn) Sale (N’bn)
Apr-23 13.50 20.00 8.72 3.50
Mar-25 13.50 20.00 14.45 8.45
Feb-28 13.55 30.00 66.65 38.50

Source: DMO

Coronation Research

In addition, N14.99 billion of the 13.53% FGN MAR 2025 and N14.99 billion of the 13.98% FGN FEB 2028 were allotted on non-competitive basis

Treasury Bills

The T-bills market also traded on a mixed note with continued sell on the shorter end of the curve due to slight liquidity pressures in the market.

We however witnessed some client demand on the longer end of the curve (Dec/Jan), with yields consequently rising by c.6bps on average.

We expect a relatively quiet trading session tomorrow, as market players anticipate an OMO auction sale by the CBN.

Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
14-Jun-18 13.00 12.00 1.00
5-Jul-18 13.00 12.00 0.00
2-Aug-18 13.00 12.00 0.50
13-Sep-18 13.50 12.00 1.00
4-Oct-18 13.50 12.50 1.00
1-Nov-18 12.75 12.00 0.00
6-Dec-18 12.35 12.10 0.00
3-Jan-19 12.30 12.05 0.00
14-Feb-19 12.50 11.50 0.00
14-Mar-19 12.00 11.00 (0.50)
4-Apr-19 12.00 11.00 (0.50)

Source: Zedcrest Dealing Desk

Money Market

The OBB and OVN rates remained slightly elevated at 16.67% and 18.42%, as there were no significant inflows into the system, even as system liquidity (c.N77bn) remained skewed to a fewer number of banks.

We expect rates to be slightly moderated tomorrow on the back of expected OMO maturities (c.267bn). This is however barring a significant OMO sale by the CBN to mop up the inflows.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 16.67 17.00
Overnight (O/N) 18.42 18.00

Source: FMDQ, Zedcrest Research

FX Market

The Interbank rate remained stable at its previous rate of N305.90/$. The NAFEX closing rate remained relatively stable at N361.42/$, with offshore demand for dollars still persistent in the market.

Rates in the Cash market depreciated further by 0.14% to a ytd high of N364.00/$, while the Transfer Market rate also depreciated to a high of N366.00/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 305.90 305.90
CBN SMIS 330.00 330.00
I&E FX Window 361.42 361.41
Cash Market 364.00 363.50
Transfer Market 366.00 365.00



The NGERIA Sovereigns maintained a slight recovery, as investors remained slightly bullish, mostly on the 30s, 32s and 38s, which gained as much as +0.30pt. Yields were consequently compressed across the curve, except for the 2018s which were sold off slightly.

The NGERIA Corps traded with mixed sentiments, as investors were mostly bullish on the Zenith 22s, FIDBAN 22s and the FBNNL 21s especially.  We however witnessed a significant decline (-1.00pt) on the SDEPLLN 23s, which was sold off at 99.60, now trading 99.50/100.50.


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