Treasury Bills, CBN

It was a quiet trading session in the bond market, yesterday, with slight demand seen on select maturities (2023, 2028 and 2030). Coupon payments on the FGN 2024 Sukuk and FGN 2025 Bond stimulated marginal buying interest causing benchmark bond yields to slip marginally by c.2bps on the day.


The yield on the 2023 Bond (4.09 TTM) was down by 12bps to 14.46% on the day while the yield on the 2028 Bond (8.92 TTM) slipped by 8bps to settle at 14.31%. Though not a benchmark bond, The 7.00% 23-Oct-2019 Bond created the most value with trades worth N68 billion. However, the yield on the bond advanced by 3bps on the day indicative of some sell pressure on the bond.

Trasury Bills

Investors in the T-bills market were a little more bullish than Bond market investors as yields on the benchmark bills compressed by c.15bps in yesterday’s trading session. Investor demand was concentrated at the intermediate to long end of the curve (above 190 DTM). The 6th-February bill recorded the highest daily change as its yield dropped by 59bps to settle at 14.28% in trades worth N6 billion.

Similarly, the yields on the 14th-November and 5th-December bills fell by 15bps and 25bps apiece to settle at 14.29% and 14.37% respectively.

Money Market

In the money market, both the Overnight (OVN) and Open Buy Back (OBB) rates advanced by no less than 800bps each to 24.43% and 22.43% respectively. Speculation around the scheduled debit on banks by the Central Bank (CBN) for premium payments to the Nigerian Deposit Insurance Corporation (NDIC), in addition to funding provisions made for the US$210 million FX wholesale auction conducted by the CBN depleted the liquidity in the interbank market and fuelled a rise in the money market rates.

System liquidity at market open was considerably lower at c.N34 billion relative to an opening liquidity position of  c.N175 billion in the previous trading session.

At the official market, the naira lost some steam and depreciated by 0.02% to settle at N306.95/$. However, at the I & E window the naira appreciated marginally (0.01%) as there was a handful of sellers and no major dollar buyers. Offers ranged betweenN357.0/$-N361.5/$ and the naira exchange rate finally settled at N360.39/$ (Previous: N360.43/$).

The bulk of the trades settled between N360-N362/$, however a few trades were consummated at N359/$ levels. Turnover in the I & E window was estimated at US$225 billion, c.3% lower than a turnover of US$231 million in the previous session. Month-to-date, dollar inflows to the tune of US$5 billion have been facilitated through the window and 76% of the inflows originate from internationals as foreign portfolio inflows (FPIs).

Outlook for today 

Today, investors in the fixed income market expect the MPC to hold monetary policy tools at current levels. Therefore, we do not anticipate a volatile trading session on the back of a “status quo” decision by the MPC.

Bond market investors are likely to engage in cautious trading ahead of the bond auction on Wednesday while we expect demand interest for t-bills to be constrained by tight system liquidity levels. In the currencies market, we expect the naira to remain firm against other major currencies.


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