CBN’s Wholesale FX Auction Pressures Money Market Rates Higher
Rates in the money market inched higher by c.3pct due to funding for the CBN’s Wholesale FX auction. The OBB and OVN rates consequently ended the session at 14.50% and 15.29%, with system liquidity now estimated at c.N15bn.
Below are highlights from activities in the fixed income and forex market today
Bonds
The FGN Bond market remained relatively stable with slight interests on the short end of the curve, pressuring yields lower by c.2bps on the day.
Yields are expected to remain relatively stable in the near term, with market players expected to favour the short term bonds over the longer dated bonds.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.19 | 13.92 | 0.00 |
| 16.39 27-Jan-22 | 14.27 | 13.85 | 0.00 |
| 12.75 27-Apr-23 | 14.26 | 14.10 | (0.09) |
| 14.20 14-Mar-24 | 14.33 | 13.83 | 0.01 |
| 13.53 23-Mar-25 | 14.15 | 14.00 | (0.08) |
| 12.50 22-Jan-26 | 14.36 | 14.27 | (0.01) |
| 16.29 17-Mar-27 | 14.32 | 14.16 | 0.02 |
| 13.98 23-Feb-28 | 14.35 | 14.14 | 0.00 |
| 12.15 18-Jul-34 | 14.42 | 14.30 | (0.02) |
| 12.40 18-Mar-36 | 14.45 | 14.25 | 0.00 |
| 16.2499 18-Apr-37 | 14.38 | 14.23 | (0.05) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market was relatively flat, with yields relatively unchanged on the day, as a wholesale FX auction by the CBN mopped up the surplus liquidity in the money market.
We expect rates to remain relatively stable at these levels, as market players look forward to the PMA which would hold upon resumption from the democracy day break.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 13-Jun-19 | 11.00 | 10.75 | 0.00 |
| 18-Jul-19 | 11.25 | 9.40 | 0.25 |
| 1-Aug-19 | 11.30 | 9.40 | (0.20) |
| 12-Sep-19 | 11.90 | 11.60 | 0.00 |
| 3-Oct-19 | 11.80 | 11.60 | 0.00 |
| 14-Nov-19 | 11.95 | 11.65 | (0.05) |
| 5-Dec-19 | 12.00 | 11.60 | 0.00 |
| 2-Jan-20 | 12.05 | 11.80 | (0.05) |
| 6-Feb-20 | 12.10 | 11.75 | 0.00 |
| 19-Mar-20 | 12.10 | 11.85 | 0.00 |
| 2-Apr-20 | 12.10 | 11.85 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates consequently ended the session at 14.50% and 15.29%, with system liquidity now estimated at c.N15bn. We expect rates to trend slightly lower tomorrow, as there are no significant outflows anticipated.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 14.50 | 11.14 |
| Overnight (O/N) | 15.29 | 12.00 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate increased by 0.02% to N306.95/$ at the spot market, while the SMIS rate remained unchanged at N356.92/$. The NAFEX closing rate in the I&E window also increased by 0.06% to N360.59/$, as the market turnover declined further by 37% to $137m. At the parallel market, the cash rate and transfer rate remained unchanged at N359.00/$ and N363.50/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.90 |
| CBN SMIS | 356.92 | 356.92 |
| I&E FX Window | 360.59 | 360.39 |
| Cash Market | 359.00 | 359.00 |
| Transfer Market | 363.50 | 363.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns were flat on the day, due to the Bank holidays in the US and UK.
We still witnessed some local interests in the NGERIA Corps, with demand mostly on the FIDBAN 22s and ETINL 24s.
