Treasury Market T-bills

This is the summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bond.

***CBN Prorates OMO T-Bills at Prior Auction Stop Rates***

Bonds: In the FGN Bond market, spreads widened as bids pulled higher in response to the release of the FGN Bond Circular for the month, where the DMO indicated its intention to offer N145bn of the 5, 10 and 30yr bonds at an auction scheduled for the 24th of July. Offers however remained depressed as demand interests persisted, mostly from real money accounts looking to reinvest their coupon inflows.

We expect yields to be relatively stable at current levels as the CBN maintains light issuance of OMO T-bills in the Money Market.

Treasury Bills: The T-bills market traded on a relatively flat note, as demand interests softened following an OMO announcement by the CBN. The Auction was significantly oversubscribed at 6.33X bid to cover, but the CBN sold only the total offered amount of N75bn with stop rates maintained at their previous auction levels across the three tenors offered.

Despite the auction stop rates clearing c.100bps above current market levels, we expect the market rates to remain relatively stable, due to the significantly large amount of unfilled bids at the auction.

Deal book 300 x 250

Money Market: Rates in the money market were slightly higher by c.3pct, as dealers reacted to the OMO announcement by the CBN. The OBB and OVN rates consequently ended the session at 6.29% and 7.00%, with system liquidity currently estimated at c.N180bn positive.

We expect rates to trend higher tomorrow, as banks fund for the bi-weekly retail FX sales by the CBN.

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FX Market: At the interbank, the Naira/USD rate remained stable at N306.95/$ (spot), and N357.70/$ (SMIS). The NAFEX closing rate at the I&E was relatively unchanged at N361.62/$, whilst the market turnover moderated further by 40% to $167m. At the parallel market, the cash and transfer rate remained stable at N358.10/$ and N361.50/$ respectively.

Eurobonds: The NIGERIA Sovereigns weakened slightly, with yields higher by c.2bps, following a further c.3pct decline in oil prices. Signs of softer negotiations between the US and IRAN strengthened bearish sentiments within the oil market.

In the NIGERIA Corps, Demand interests remained firm, with the UBANL and FIDBAN 22s outperforming other traded tickers with c.0.2pct PX gains during the session.


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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