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 10th, 2019.
*Nigeria Shines As Investor Flows Persist In Emerging Market Eurobonds*
Bonds: Spreads in the Bond markets tightened opening the week, as offers improved along the long-end of the Bond curve. Yields expanded by c.3bps on the average across the benchmark Bond curve, most notably on the short- to mid-end maturities. Average yields closed the session at 14.63%.
Reduced appetite for FGN Bonds by portfolio investors continue to cause lethargic trading sessions. Yields at these levels provide good opportunities for yield-hunting investors, we expect the market to be order-driven for most of the coming week.
Treasury Bills: Conversely, we witnessed demand interest in the Treasury Bills market in the opening session of the week. Foreign portfolio investors showed particular interests at the long end of the NTB Curve, with active trade on the May and June maturities. Yields across the NTB curve consequently compressed by c.5bps across the NTB curve.
As we move towards the first Primary Auction for the month, we expect demand to remain heavy at the long tenors on offer as investors look for best available yields. Squeezing system liquidity reduce the likelihood of supply by the CBN, thus we expect secondary market trading activities to persist for the rest of the coming week.
Money Market: Funding pressures from the weekly FX auctions conducted by the CBN continue to weigh on Money Market rates. OBB and OVN rates closed the trading session at 12.29% and 12.71% respectively, up from the previous week’s close, as system liquidity is estimated to close at c.N100bn positive.
We expect rates to remain elevated as system liquidity remains tight, however, OMO maturities expected later in the week should provide some respite.
FX Market: The Naira continues to show its resilience at the interbank market. While the CBN spot rate depreciated by 5k to close at N307.00/$, the NAFEX rate gained 8k to close at N360.63/$.
The Naira rates remained unchanged at the parallel markets, as the cash and transfer rates closed at N358.50/$ and N362.50/$ respectively.
Eurobonds: The rally on the NIGERIA Sovereigns showed no sign of letting up in today’s session, expectations of a FED rate cut as early as July rise after weak jobs figures amid growing fears for a US economic recession and escalating trade tensions. Yields dropped further by c.5bps across the sovereign Eurobond curve, as we witnessed continued demand for the Nigeria Sovereign Eurobonds.
The NIGERIA Corps also received bullish sentiments, as investors demand continued for select papers. The FIDBAN 2022s led the pack, gaining +8bps to consolidate gains from the previous week.
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