As CBN bans FX for textile import, plans single digit lending for sector***
The FGN Bond Market traded on a mixed note, with yields trending markedly higher following slight sell off earlier in the session. We however observed renewed buying interests on the mid to long end of the curve later in the session, with the uptrend in yields consequently thinning out to c.3bps on the day.
Market players are believed to have initially reacted to rumours of a removal (terminal leave) of the CBN Governor before the expiration of his tenure in June. Following reassurances by the apex bank of the contrary, we do not see scope for a further spike in yields as witnessed in today’s session.
The T-bills market remained slightly bearish as the CBN sustained its OMO interventions with a total sale of N28.58bn and N140.58bn on the 100 and 192-day bills offered at the auction. The 192-day bill remained oversubscribed just as the CBN cut the stop rate further by 3bps to 13.45% whilst stop rates were unchanged at 11.90% on 100-day bill offered. The Secondary market yields consequently trended higher by c.20bps on the day.
We expect the market to remain scantily traded, as market players look forward to the possibility of a long tenor OMO offering on Thursday where we have c.N129bn in Maturing OMO bills.
Rates in the money market declined further by c.4pct, as system liquidity remained moderately robust following inflows from Paris club refunds and I&E FX purchases by the CBN. The OBB and OVN rates consequently ended the session at 9.33% and 10.42% respectively.
We expect rates to remain relatively stable, barring a significant OMO sale by the CBN.
At the Interbank, the Naira/USD rates remained unchanged at N306.90/$ (Spot) and N356.92/$ (SMIS). The NAFEX rate in the I&E window appreciated further by 0.06% to N360.77/$ following continued inflows from FPIs into the market. At the parallel market, the cash and transfer rates remained unchanged at N358.00/$ and N364.50/$ respectively.
The NGERIA Sovereigns remained bearish, with yields trending higher by c.9bps on the day.
In the NGERIA Corps, we witnessed renewed demand for the DIAMBK 19s whilst Investors were slightly bearish on the ACCESS 21s Snr.