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N183.7bn in treasury bills to mature this week

By on December 30, 2014

The banking system is expected to receive a boost in liquidity as treasury bills worth N183.73 billion are expected to mature this week.

This, is expected to also help in moderating interbank rates during the week.
Meanwhile, interbank rates moderated last week as a result of the boost in financial system liquidity.

Treasury bills worth N53.38 billion were auctioned last Wednesday via the primary market. A breakdown of this showed they were made up of 91-day bills worth N21.54 billion and 182-day bills worth N31.84 billion.

A report by Cowry Asset Management Limited however showed that the debt instruments auction were offset by treasury bills maturities made up of 91-day bills worth N21.54 billion; 182-day bills worth N31.84 billion; and 136-day bills worth N221.47 million.

This was in addition to recent Federation Accounts Allocation Committee inflows.
Hence, Nigerian Interbank Offered Rates for the overnight, 1-month, 3-month and 6-month tenors, declined, respectively to 11.85 per cent (from 15.17 per cent); 14.68 per cent (from 15.90 per cent), 15.56 per cent (from 16.41 per cent), and 16.07 per cent (from 17.37 per cent).

The market was closed on Thursday and Friday, due to public holiday declared to mark the Christmas celebration. It will also be closed this Thursday as a result of the New Year public holiday.

 

Forex Market

There were no forex sales at the Retail Dutch Auction System (RDAS) last week due to the closure of the market by the Central Bank of Nigeria (CBN), for Christmas and New Year holidays.

But a review of naira performance for the year by analysts at Cowry Asset Management indicated that on a year-to-date basis, the local currency has depreciated by 9.30 per cent (or N14.30) at the official market segment to N168 to a dollar as at December 24, 2014, from the N153.70 to a dollar it was at the beginning of the year.

Similarly, the nation’s currency depreciated by 13.26 per cent (or N21.22) to N181.18 to a dollar, from N159.96 to a dollar at the interbank market. Also, at the Bureau De Change (BDC) and parallel market segments, the foreign exchange rate band depreciated by 11.11 per cent (N19) and 10.40 per cent (N18), respectively, to N190 to a dollar and N191 to a dollar, from N171 and N173 to a dollar respectively.

Consequently, the spread between the RDAS and interbank market was N17.50, while the spread between the RDAS and the BDC market was N20.50.

At the interbank market, the recent CBN suspension of open position limit for banks succeeded in calming the market as the local currency appreciated by 0.57 per cent to 185.50 to dollar.

“We believe that this will be a momentary respite as the local currency may continue to face pressure until the downward trend in oil price reverses,” the report added.
Bond Markets

Federal Government bond prices at the local over- the-counter market recorded mixed outcomes. The 20-year, 10.00% FGN JUL 2030 bond lost N3.50 (yield increased to 14.74% from 14.01%). Also, the 10-year, 16.39% FGN JAN 2022 paper shed 20 kobo (yield rose to 15.29% from 15.25%). However, the 7-year, 16.00% FGN JUN 2019 instrument advanced by 20 kobo (yield declined to 15.37% from 15.43%); the 5-year 15.10% FGN APR 2017 bond rose by 35 kobo (yield fell to 15.15% from 15.33%); while the 3-year, 13.05% FGN AUG 2016 debt strengthened by 5 kobo (yield decreased to 15.39% from 15.41%).

At the international capital market, Federal Government Eurobond prices
appreciated across all maturities. For instance, the 6.75% FGN JAN 2021 note rose by $0.97 (yield decreased to 6.08% from 6.13%) while the 5.13% FGN JUL 2018 debt gained $0.24 (yield fell to 4.87% from 5.11%).

Similarly, the 6.38% FGN JUL 2023 bond increased by $0.49 (yield slid to 6.40% from 6.50%).

This week, fixed income market analysts anticipate bargain hunting activities in the domestic market with resultant price appreciation amid anticipated boost in liquidity.

 

[ThisDay]