Home Business News Daily Update: Bond auction rates clear c.34bps lower following 271% over subscription

Daily Update: Bond auction rates clear c.34bps lower following 271% over subscription

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Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.

This report is dated May 22nd, 2019.

***Nigeria records $3bn trade surplus with USA in 2018***

Key Indicators

Bonds: The FGN Bond market traded on a relatively quiet note, with yields relatively unchanged on the day, as market players shifted focus to the Bond auction where a total of N100bn of the 5, 10 and 30yr bonds were on offer by the DMO.

The bond auction was significantly oversubscribed by 271%, with most demand skewed to the 10 and 30-yr maturities and bid to cover ratio clearing at an average of 2.44. Rates consequently moderated significantly lower by c.34bps avg. from their levels at the previous auction.

We expect the market to trade on a bullish note tomorrow, given the significantly lower clearing rates at the auction, and with some unmet demand at the auction also expected to filter into the market.

Coronation Research

Treasury Bills: The T-bills market remained slightly bullish, but with rates consolidating towards the mid and upper 11% levels as some market players sought to take profits on some mid and long-tenured maturities. Yields were however lower by c.20bps on the day, following some further compression on the shorter end of the curve.

Coronation Research

Barring a renewed OMO issuance by the CBN, the market should remain slightly bullish on the back of the c.N107bn expected OMO maturities.

Money Market: Rates in the money market remained unchanged from their previous levels, as there were no significant outflows from the system, whilst system liquidity remained robust at c.N260bn positive. The OBB and OVN rates consequently ended the session at 4.57% and 5.29% respectively.

We expect rates to trend lower tomorrow, barring a renewed OMO sale by the CBN.

FX Market: At the Interbank, the Naira/USD rate was unchanged at N306.90/$ (spot), and N356.92/$ (SMIS). The NAFEX closing rate in the I&E window however increased by 0.11% to N360.80/$, as market turnover dipped by 47% to $72m. At the parallel market, the cash and transfer rates remained unchanged at N359.00/$ and N363.50/$ respectively.

Eurobonds: The NGERIA Sovereigns rallied into the opening of the session but weakened slightly later on with yields closing lower by c.6bps on the day.

In the NGERIA Corps, we witnessed some interests mostly on the FIDBAN 22s and ETIN 24s.

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Contact us:

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

Disclaimer: Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment research or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.

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