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Market Update: CBN conducts further OMO auction to mop up excess system inflows

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Daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills, bonds, FX rates, inflation, oil price.

The report is dated May 7th, 2019.

***Creative industry to access up to N500m loans*** – CBN

Key Indicators

Bonds: The Bond market traded on a relatively flat note with some demand on the 2023s compressing yields marginally lower by c.3bps on average. We also witnessed slight demand on some mid and long tenured maturities, with market players showing renewed interest closer to c.14.60% levels.

We expect yields to remain relatively stable in the near term, as the CBN maintains a slight moderation on the short term OMO T-bill rates.

Treasury Bills: Yields in the T-bills market trended slightly higher, as the CBN announced a new round of OMO offerings due to the signifcantly robust system liqudity levels. The OMO auction remain oversubscribed with a 1.55 bid to cover ratio, and demand still skewed to the longer tenured offering. A total of c.N172.68bn T-bills were sold, with rates slightly lower across all tenors.

We expect rates to remain relatively stable tomorrow due to the still robust system liquidity levels. This is however barring a further OMO sale by the CBN.

Money Market: The OBB and OVN rates declined slightly by c.1pct, as system liquidity remained robust due to inflows from discounted promissory notes by the CBN. The OBB and OVN rates consequently ended the session at 10.07% and 10.86% respectively, with system liquidity now estimated at c.N300bn.

We expect rates to remain relatively stable, barring a significant OMO sale by the CBN.

FX Market: At the Interbank, the Naira/USD rate rose slightly by 0.02% and 0.04% to N307.00/$ (spot) and N356.60/$ (SMIS) respectively. The NAFEX closing rate in the I&E window however fell by 0.07% to N360.99/$. At the parallel market, the cash rate fell by 0.03% to N358.90/$, while the transfer rate remained unchanged at N363.50/$.

Eurobonds: The NGERIA Sovereigns remained slightly bearish, with yields higher by c.3bps, following further selloff on the long end of the curve, amid a decline in oil prices and weaker EM sentiments from the US Tariff threat on China.

In the NIGERIA Corps we witnessed renewed interests on the longer dated tickers, notably on the UBANL and FIDBAN 22s. We however witnessed better sellers of the ETINL 24s.

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Contact us:

Dealing Desk: 01-6311667 Email: research@zedcrestcapital.com

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