Bond Yields Retrace Higher Following Q3 FGN Bond Calendar Release


Below are the highlights of trading activities in the fixed income and forex market today.


In the FGN Bond market, spreads widened as bids pulled higher in response to the release of the FGN Bond Circular for the month, where the DMO indicated its intension to offer N145bn of the 5, 10 and 30yr bonds at an auction scheduled for the 24th of July. Offers however remained depressed as demand interests persisted, mostly from real money accounts looking to reinvest their coupon inflows.

We expect yields to be relatively stable at current levels as the CBN maintains light issuance of OMO T-bills in the Money Market.

Money Market

Rates in the money market were slightly higher by c.3pct, as dealers reacted to the OMO announcement by the CBN. The OBB and OVN rates consequently ended the session at 6.29% and 7.00%, with system liquidity currently estimated at c.N180bn positive.

We expect rates to trend higher tomorrow, as banks fund for the bi-weekly retail FX sales by the CBN.

FX Market

At the interbank, the Naira/USD rate remained stable at N306.95/$ (spot), and N357.70/$ (SMIS). The NAFEX closing rate at the I&E was relatively unchanged at N361.62/$, whilst the market turnover moderated further by 40% to $167m. At the parallel market, the cash and transfer rate remained stable at N358.10/$ and N361.50/$ respectively.


The NGERIA Sovereigns weakened slightly, with yields higher by c.2bps, following a further c.3pct decline in oil prices. Signs of softer negotiations between the US and IRAN strengthened bearish sentiments within the oil market.

In the NGERIA Corps, Demand interests remained firm, with the UBANL and FIDBAN 22s outperforming other traded tickers with c.0.2pct PX gains during the session.

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