Fixed Income Market Report for 5th of June 2017

The bond market opened today on a quiet note with some slight  buys on the 2036s bonds at the start of market. However, towards the close of the trading session, we saw sell-off on the 2024 and 2036 bonds. Consequently, the bond yield curve traded flat with more of the trade volumes skewed towards the 2036s bonds. Demand for FGN bonds has remained weak due to the elevated T-bills yield.  We expect another quiet trading session tomorrow as we do not foresee any renewed demand for FGN bonds.
 
The Treasury Bills market traded with mixed sentiment today  with a bit of sell off on the short end of the curve and demand on the medium end . The long end traded flat due to OMO floatation by the CBN . Yields increased marginally by 7bps across the entire yield curve.   We expect the market to remain client driven in the near term as we expect more supply of medium and long tenured T-bills via OMO auctions tomorrow.
 
The OBB and O/N rates remained calm to close at 9.33% and 9.67% despite the sale of N10.2Billion worth of OMO T-bills and announcement of a $100million special FX intervention . Market liquidity is estimated at N10billion positive as at close of business today.  Interest rates are expected to inch up slightly opening tomorrow  as the CBN continues their liquidity tightening activities to tame the demand for FX and curb inflationary pressures.
 
The local unit opened at  NGN310.00/$1  and remained unchanged over the course of the trading session. Rates eventually closed at NGN305.55/$1 as the CBN injected some FX  liquidity in the market.  We expect the CBN to continue to intervene in the interbank market to calm the demand for FX.
 

FGN BOND CLOSING LEVELS    
Description Bid Yield (%) Offer Yield (%)
16.00 29-JUN-2019 16.45 16.35
15.54 13-FEB-2020 16.36 16.26
14.50 15-JUL-2021 16.44 16.34
16.39 27-JAN-2022 16.22 16.12
14.20 14-MAR-2024 16.08 15.98
12.50 22-JAN-2026 16.16 16.06
16.2884 24 MAR 2027 16.32 16.22
12.1493 18-JUL-2034 16.05 15.95
12.40 18-MAR-2036 16.04 15.94
     
TBILLS CLOSING LEVELS    
Maturity Bid Discount (%) Offer Discount (%)
31-Aug-17 17.40 17.15
30-Nov-17 18.65 18.40
3-May-18 18.55 18.30

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