FGN Bonds record first undersubscription in 2 years
Patience Oniha, Director-General, Debt Management Office

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 June 25th, 2019.

***CBN Manufacturing PMI Expands for 27th Consecutive Month***

Key Indicators

Bonds: The FGN Bond market remained relatively stable, with yields slightly lower by c.4bps on the day, following renewed demand interests on the short end of the curve.

The DMO is set to auction a total of c.N100bn FGN bonds at the auction scheduled for tomorrow. Whilst we expect demand at the auction to be robust given the c.N351bn Jun 2019 bond maturity, we expect to stop rates at the auction to still clear above the previous auction levels, given the bearish sentiments within the FGN bond space which lifted yields higher during the month.

Treasury Bills: The T-bills market traded on a bullish note with demand interests notable across the curve, largely supported by the surplus money market liquidity and the continued absence of an OMO auction by the CBN.

We expect the mild bullish sentiments to persist over the course of the week, barring an OMO auction, which should likely resume next week due to significant inflows expected from FAAC Payments and Bond Maturities.

[READ THIS: Naira under pressure as forex demand increases]

Money Market: Rates in the money market declined by c.3pct as there were no significant funding pressures, whilst system liquidity remained moderately robust at c.N290bn positive. The OBB and OVN rates consequently ended the session at 9.86% and 10.43% respectively.

We expect rates to remain relatively stable, as there are no significant outflows anticipated.

FX Market: At the interbank, the Naira/USD rate remained stable at N306.90/$ (spot) and N357.53/$ (SMIS), whilst the NAFEX rate at the I&E window rose by 39k to N360.77/$. At the parallel market, the cash and transfer rates closed unchanged at N359.20/$ and N362.50/$ respectively.

[READ MORE: Dangote Cement announces dividend payout and AGM date]

Eurobonds: The NIGERIA Sovereigns weakened slightly in today’s session, with yields marginally higher by c.2bps to 6.78% on average.

Demand Interests in the NIGERIA Corps remained firm, with most papers unavailable to trade in the market on the back of the significant demand from the ACCESS and FBNNL Calls. The FBNNL 21s, however, continued to weaken due to the call announcement and remained the outlier amongst the bank papers.


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 advice 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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