FBNQuest FI-FX Daily Watch 28 September 2017
Opening market liquidity was N160bn (negative) on Wednesday. Interbank rates dipped to 15% to 20% levels. The secondary market for NTBs was quiet and saw sales at the short end of the curve.
The FGN bond market was relatively active, with yields tending to decline on the assumption that stop rates would fall at today’s auction. Those rates did indeed fall, by up to 98bps, at the DMO’s auction in which the total bid of N395bn was the highest for more than four years. The DMO also reported that its maiden sukuk offer (N100bn and seven-year paper) was slightly oversubscribed. As for the Eurobond market, sovereign bond yields picked up.
The CBN’s daily fx intervention was again US$0.5m, at N305.30. Turnover on NAFEX picked up from US$250m on Tuesday to US$300m. Indicative rates ranged from N354 to N361. The USD rose to a one-month high against a basket of currencies, driven by renewed optimism around fiscal reforms and Fed chair Yellen’s earlier remarks about the need for gradual rate hikes.