Culled—Proshare
5/6/2018/Zedcrest Capital
***DMO to Fully Rollover Q3 NTB Maturities***
Bonds
The bond market traded on a slightly bearish note with continued sell on the longer end of the curve (36s and 37s) taking yields slightly higher by c.2ps on average. We expect a gradual uptrend in yields in the near term as market players anticipate increased domestic borrowings for funding of the 2018 Budget deficit (c.2trn). This sentiment is also strengthened by release of the Q3 PMA Calendar today, with the DMO planning to rollover all Maturing bills.
Treasury Bills
The T-bills market traded on a slightly bullish note with slight demand witnessed from clients in absence of an OMO auction by the CBN. Yields consequently compressed slightly by c.5bps on average. We expect yields to remain relatively stable tomorrow on the back of the robust system liquidity and expected OMO maturities on Thursday. Market players would however begin to price in anticipated funding for a likely OMO Auction Thursday, and retail FX bids on Friday. This is expected to place slight pressure on yields in the coming days to the weekend.
Money Market
The OBB and OVN rates remained relatively stable at 3.50% and 4.00% respectively. This was as system liquidity remained significantly buoyant at c.N400bn positive. We expect rates to remain stable tomorrow, as there are no significant funding pressures expected. This is however barring an OMO auction sale by the CBN.
FX Market
The Interbank rate remained stable at its previous rate of N306.00/$, even as the CBN’s external reserves maintained a steady decretion, down to $47.62bn as at May 30. The I&E FX rate appreciated by 0.09% to N360.78/$, while the total volume traded fell by 67% to $195m. Rates in the Cash and Transfer Market appreciated further by 50k to N361.20/$ and N364.00/$, as the CBN has begun selling Dollars in the cash market at a lower rate of N357/$ to BDC operators.
Eurobonds:
The NGERIA Sovereigns were slightly lower, with some sell mostly on the 38s and 47s, taking yields higher by c.2bps on average. The most loses were however on the 30s and 38s, which were lower by –0.25pt and –0.45pt respectively.
The NGERIA Corps were mixed, with the most sell witnessed on the Access 21s and Zenith 22s which lost c.-0.10pt. The SEPLLN 23s were however the outperformers having gained +0.15pt as of last trades.
