FI yields plunge amid N1 trillion OMO sale 

01 March 2019 : With N399 billion hitting the system via an OMO maturity, the CBN conducted an OMO auction, offering N400 billion and selling N1.08 trillion across the 91DTM, 182DTM and 364DTM bills at stop rates of 11.90%, 13.50% and 14.30% (Effective rates: 12.26%, 14.47% and 16.68%). Notably, whilst stop rates were unchanged on the 91DTM and 182DTM, they moderated significantly (70bps) on the 364DTM bill. Amid this, Interbank Call rate advanced 367bps to 13.17%. 

Meanwhile, trading in the secondary T-bills market remained positive, with buy sentiment especially prevalent at the longer-end of the curve. Overall, yields declined 30bps on average with notable movements on the 77DTM (down 138bps to 9.07%) and 350DTM (down 135bps to 15.51%) bills. Demand was similarly strong across the bond market, with benchmark yields declining 17bps on average. Remarkably, yields on the 10.00% FGN JUL 2030 and 16.25% FGN APR 2037 bonds declined 39bps and 30bps respectively to settle at 13.90% and 13.83% respectively. 

With market liquidity dampened by the heavy OMO sale, analysts expect a less active day in the T-bills space. Meanwhile, analysts foresee further buy-side activity in the bond space as investors continue to target longer-dated securities. 

Sell-off intensifies despite Industrial Goods uptick 

The ASI dipped a further 162bps yesterday as sell-offs intensified on the index, with three of four key sectors closing in the red. Market activity was also up, with market turnover reaching N5.3 billion. 

The Banking sector (-456bps) was the biggest loser, as heavyweights GUARANTY (-685bps), UBA (-449bps) and ZENITHBANK (-402bps) all shed points. Furthermore, the Consumer Goods (-202bps) and Oil & Gas (156bps) sectors also dropped points, driven by sell-offs in NB (- 445bps), NESTLE (-200bps) and OANDO (-992bps). The Industrial Goods sector (+67bps) was however the sole gainer, following an uptick in DANGCEM (+145bps) which outweighed a loss on WAPCO (-39bps). 

Market breadth remained negative with 10 advances and 34 declines. 

Market Outlook 

With sell pressure showing no signs of slowdown at market close, analysts foresee further sell-offs in the equity market today. 

Stock Watch: After dropping 5% yesterday, ACCESS hit a multi-year low price of N5.70, its lowest price since December 2016. The stock has declined 10% this week alone to trade at a 37% discount to its Consensus target price of N9.08. 

Corporate Disclosures 

The Board of Directors of Dangote Cement Plc has notified the Nigerian Stock Exchange, shareholders and the general public of the appointment of Mr Guillaume Moyen as acting Chief Financial Officer with effect from 1 March 2019. 

Reporting for EasyKobo on Friday , 01 March 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited