Culled—Proshare
18/1/2018/Zedcrest Capital
***Commodity trader Vitol in $530m Nigerian oil-for-loan deal***
Bonds
The bond market opened on a bullish note as some market players had strong bullish expectations following release of the Q1 FGN bond calendar. We however witnessed a slowdown in this trend, with trades on the 2027s bond done at successive higher yield levels from 13.21% – 13.29%. The 2037 bond also traded from a low of 13.15% up to 13.19%. Average bond yields declined by 6bps d/d, as market players maintained a slightly bullish sentiment across the curve. We expect a slight uptick in yields, as most clients are more comfortable buying at 13.3% levels. 
Treasury Bills
The T-bills market traded on a slightly bullish note, with demand skewed to the short end (Feb – Apr), as market players cherry-picked some attractive bills which were previously sold up to higher levels before the PMA. We also witnessed significant demand for the OMO auction on the 19-Apr and 9-Aug bill (especially), with a total subscription and sale of c.N195bn at 12.60% and 14.40% respectively. We expect the market to be slightly bearish tomorrow, as banks would be looking to fund for retail FX bids coupled with expectations of another OMO issuance by the CBN.
Money Market
The OBB and OVN rates declined slightly to 5.25% and 5.75%, due to inflows from OMO maturities and bond coupon payment which helped ease the impact of outflows for OMO sales by the CBN. We however expect rates to trend higher tomorrow due to expected funding for retail FX by banks.
FX Market
The CBN Official spot rate appreciated by 0.02% from its previous day rate of N305.70/$. Rates at the Investors and exporters FX window depreciated further by 0.04% to N360.70/$. Rates at the parallel market however stayed flat at N362.80/$.
