Money Market Review

Last week, the Nigerian interbank money market moderated following the maturity of 192-day treasury bills worth N415.51 billion, 92.66 per cent higher thantheN113.68 billion that matured in the preceding week.

Consequently, Nigeria Interbank Offered Rate (NIBOR) for overnight funds, one month, three months, six months and 12 months tenor buckets mellowed to 19.33 per cent (from 20.04 per cent), 17.07 per cent (from 17.24 per cent),18.82 per cent (from 19.27 per cent) and 20.33 per cent (from 21.65 per cent) respectively. In the same vein, against the backdrop of boost in financial system liquidity, Nigerian Interbank Treasury Bills True Yields (NITTY) decreased for most maturities on the back of bargain hunting activity yield on one month, three months, six months rose to 14.90 per cent (from 15.82 per cent), 15.52 per cent (from 17.07 per cent) and 17.18 per cent (from 19.12 per cent) respectively. However, yield on12 months bill rose to 23.54 per cent (from 22.43 per cent).


Foreign exchange market

The Nigerian foreign exchange market witnessed sustained depreciation of the Naira against the U.S. Dollar in all segments of the market as foreign currency supply remained inadequate. Dealers at Cowry Assets Management Limited attributed this to a 0.51per cent week-on-week decline in foreign exchange reserves to $25.90 billion as at Wednesday. Despite a total trade of $13.13 million at the interbank market segment largely attributable to Central Bank intervention on Tuesday and Thursday, the local currency depreciated at the interbankforeignexchangemarketby0.34 per cent toaverageN319.5/$.

Similarly, despite sales by authorised dealers to Bureau De Change operators, the naira depreciated, on average, against the green back at the Bureau De Change and the parallel (or “black”) market segments by 1.70 per cent and 1.67 per cent to average N387.75/$ and N394.75/$ respectively.

In the current week, Cowry Assets Management analysts expect gradual rebound of the naira at the alternative market segments as BDCs continue to source forex cash from the banks.


Bond Market

In the just concluded week, Over the Counter (OTC) FGN bond market witnessed sustained bargain hunting, resulting in appreciation in bond prices for all maturities.

The 20-year, 10 per cent FGN JUL2030 bond appreciated by N0.61 (yield decreased to 15.23 per cent); 10-year, 16.39 per cent FGN JAN 2022 paper gained N1.49 (yield fell to 14.81 per cent); the7-year, 16.00 per cent FGN JUN2019 bond gained N1.15 (yield decreased to 14.93 per cent); while the five-year, 15.10 FGN APR 2017 paper rose by N0.42 (yield declined to 19.52 per cent).

At the London Stock Exchange, traded FGN Eurobonds also appreciated on  resumed bargain hunting activity, the five-year, 5.13 per cent JUL 12,2018 bond and the 10-year, 6.38 per cent JUL 12, 2023 bond lost $0.66 (yield fell to 4.26 per cent) and $2.05 (yield fell to 6.40 per cent) respectively.

This week, Debt Management Office will issue Federal Government bonds (all reopening) worthN110 billion, viz: five-year, 14.50 per cent FGN JUL 2021 debt worth N40 billion; 10-year, 12.50 per cent FGN JAN 2026 bond worth N30 billion; and 20-year, 12.40 per cent FGN MAR 2036 paper worth N40 billion.

“We expect to prates to mirror last primary market auction rates in line with CBN’s drive to keep rates high as incentive to attract Foreign Portfolio Investors,” the assets management company stated in a note to investors.