CBN to mop up N310bn through treasury bills
THE Central Bank of Nigeria (CBN) will this week mop up N310 billion through sales of treasury bills. Meanwhile, Demand for Nigeria’s Eurobond on the London Stock Exchange (LSE) persisted last week translating to price appreciation across tenors.
Treasury bill sales In continuation of its liquidity management efforts, the CBN will sell treasury bills worth N310 billion this week comprising: 91-days bills worth N26.14 billion; 182-days bills worth N62 billion and 362 billion worth N222 billion.
The treasury bills sales will offset the effect of maturing treasury bills worth N248 billion during the week.
According to Afrinvest analysts, the treasury bill will be oversubscribed due to the attractive interest rates attached to each bill.
Analysts at Cowry Assets Management Limited however projected that the treasury bills sale will not have adverse effect on the volume of liquidity in the interbank money market due to outstanding inflows from the N465 billion statutory allocation funds shared last week by the Federation Allocation Accounts Committee (FAAC).
Last week the interbank money market experienced unprecedented scarcity of funds triggered by outflow for dollar purchases, with short term cost of funds rising up to 200 percent on Thursday before retreating to 15 percent on Friday.
System liquidity In its weekly review of financial markets, Afrinvest Plc explained: “System liquidity oscillated during the week, closing the first trading day with a negative balance of N175.3 billion. The largest withdrawal from system liquidity occurred on Tuesday as the CBN announced FX forwards sales worth $370.0m which saw money market rates (OBB and OVN) close the day at 128.3 per cent and 132.0 per cent respectively.
“On Wednesday rates moderated to 30.8 per cent and 33.7 per cent but a further FX sales worth $230.0m by the CBN pressured Open Buy Back (OBB) and Over-Night ( OVN) rate to 111.6 per cent and 133.3 per cent on Thursday. OBB and OVN rates settled at 13.1 per cent and 14.1 per cent respectively on Friday, down 4.7 per cent and 4.5 per cent week-on-week(W-o-W) respectively.
“Performance in the Treasury Bills market was largely bearish due to tighter system liquidity during the week. Average yield trended higher on most trading sessions, up 36bps on Monday but eased by mid-week as system liquidity improved. Nonetheless, average rate raised 55 basis points (bps), week-on-week (W-o-W) closing at 16.9 per cent on Friday.
Demand for Eurobond persist: Meanwhile Nigeria’s Eurobond continued to enjoy price appreciation on the London Stock Exchange (LSE) due to persistent demand by foreign investors.
The 5-year, 5.3% $500 million JUL 12, 2018 bond, appreciated by $1.25 (yield fell to 4.94 per cent) while the 10-year, 6.38% $500 million JUL 12, 2023 bond appreciated by $2.08 (yield fell to 5.68 per cent). Also, the 10-year, 6.75 % $500 million JAN 28, 2021 bond gained $0.16 (yield dropped 3.59 per cent). Commenting on this development, Afrinvest Plc said: “Positive sentiments filtered across Sub-Saharan (SSA) sovereign instruments as yields fell across the Nigerian, Ghana, Gabon, Ivory Coast, Kenya, Zambia, Senegal, and South African instruments –save for the South African 2024 and 2041. The Nigerian 2023 instrument emerged the best performer under our coverage with a year-to-date (YTD) return of 6.4 per cent.
“Despite the downgrade of some Banks by Fitch Ratings Agency amid a successful issuance of the $1.00bn Nigerian Eurobond, the Nigerian Corporate Eurobonds have been experiencing positive sentiments. This week saw positive performance filter through a range of instruments as yields fell on all Corporate Eurobonds but for the ACCESS 2017 (yields rose 11bps) and FIRST BANK 2021(yields rose 2bps). Nonetheless, the DIAMOND 2019 remains the best performing with YTD return of 13.3 per cent.
Similar to the Treasury Bills market, sentiments in the local Bonds market was bearish this week as average yield closed higher on 4 out of 5 trading sessions. This was largely due to the relatively tight system liquidity as well as CBN’s FX forwards sales during the week. Eventually, average yield closed the week at 16.2 per cent indicating a 17bps appreciation W-o-W.”
House Reps warns contractors on CBN’s intervention projects The House of Representatives Committee on Banking and Currency last week warned contractors handling the various intervention projects of the CBN in the educational sector to stick to the specifications and timelines of the projects as contained in their contracts.
Chairman of the Committee, Hon. Jones Onyereri gave this warning at the of the committee’s oversight visit to the CBN’s project locations in Lagos State.
He said that the Committee would not accept any deviation from the contractual agreements nor agree to any variation to the contract sums.
The Committee however commended the CBN intervention projects in the educational sector affirming that it will add value to Nigeria’s economic development aspirations.
The intervention project sites visited by the Committee included the three blocks of two and three-storey hostel buildings and an adjourning 500-seater auditorium at the Administrative Staff College of Nigeria (ASCON), Topo, Badagry and the multi-complex faculty, hotel and auditorium facilities at the University Of Lagos Centre Of Excellence. The facilities are part of the CBN’s commitment to building Basking in the euphoria of the appreciation recorded by the naira last week, the Central Bank of Nigeria (CBN) has restated its commitment to exchange rate stability.
Speaking at the Guaranty Trust Bank Plc’s 2017 non-oil export workshop held in Lagos at the weekend, the Deputy Director Trade and Exchange Department of the CBN, Olu Vincent urged Nigerians to continue to support public policies.
He further stated that measures had been put in place to support businesses in the country, stimulate growth and grow the economy. Olu called on importers to ensure that the country benefits from what they are importing.
He said: “We (CBN) are going to do more to stabilise the value of the naira so that everybody is happy. The present government is trying to ensure that we consume what we produce locally.”
Reacting to an earlier appeal by an exporter for the federal government not to restore the export expansion grant (EEg), Vincent, said there was pressure on federal government to restore the EEG. According to him, although the CBN was against because it was being abused, but the central bank does not have the powers to prosecute.
Vincent said the federal government had disclosed plan to reintroduce the EEG. He assured the exporters that the CBN was committed to supporting their businesses.
The event which was organised by the GTBank brought together some of its key exporters to dialogue on issues affecting trade, forex and export activities, thereby providing sustainable headway for the exporters.
“Last year at the beginning of this crisis, the Governor of the CBN, Mr. Godwin Emefiele had a meeting with the exporters in Lagos. At the meeting, we discussed issues bothering on remittances, volatility in exchange rate and other issues. “Sadly, there was no sincerity of purpose amongst the people that came for that meeting. But today we can see some level of sincerity and discourse,” Vincent said.
“About 15 years ago, if you were an exporter and you didn’t repatriate your export proceeds based foreign exchange embargo, people started having the feeling that we were killing businesses.
“We decided that for the exporter, there must be Know-Your Customer (KYC) by the bank. The bank must know the account owner. We decided to shift the responsibility to commercial banks who know much of their own to make sure that the business keeps going.
Funds don’t come back to us. There are people that export with the intentions of not bringing back the funds to the country.”
He explained that under the new export regulation, if an exporter exports and doesn’t repatriate export proceed to the bank where the individual transacting business with, the bank would be sanctioned by the CBN, adding that the customer has a responsibility of bringing back the export proceed, therefore in order for the banks to accommodate the penalty from the banks they need to create a pool whereby until you repatriate the export proceeds you will not have access to the money.
Vincent stressed that the bank was supposed to know the customer very, because if the customer doesn’t bring back the export proceed, the bank would be sanctioned, while urging the bank to devise strategies to prevent them from incurring unnecessary loss.
Earlier, the Chief Executive Officer, Fullmark Commodity Limited, one of the leading commodities trading companies in the country, Sriram Venrateswaran advised the federal government not to restore the EEG.
Venrateswaran alleged that the EEG was abused by a lot of exporters in the country when it was operational, saying that a lot of companies that were not in the export business were actually collecting the grant.
This, according to him affected general exporters who could not get full value.
Furthermore, he alleged that most exporters joined the trade because they were getting 30 per cent grant from the federal government.
He however stressed the need for the federal government to fix the country’s infrastructure to stimulate economic activities.
THE Central Bank of Nigeria (CBN) will this week mop up N310 billion through sales of treasury bills. Meanwhile, Demand for Nigeria’s Eurobond on the London Stock Exchange (LSE) persisted last week translating to price appreciation across tenors.
Treasury bill sales In continuation of its liquidity management efforts, the CBN will sell treasury bills worth N310 billion this week comprising: 91-days bills worth N26.14 billion; 182-days bills worth N62 billion and 362 billion worth N222 billion.
The treasury bills sales will offset the effect of maturing treasury bills worth N248 billion during the week.
According to Afrinvest analysts, the treasury bill will be oversubscribed due to the attractive interest rates attached to each bill.
Analysts at Cowry Assets Management Limited however projected that the treasury bills sale will not have adverse effect on the volume of liquidity in the interbank money market due to outstanding inflows from the N465 billion statutory allocation funds shared last week by the Federation Allocation Accounts Committee (FAAC).
Last week the interbank money market experienced unprecedented scarcity of funds triggered by outflow for dollar purchases, with short term cost of funds rising up to 200 percent on Thursday before retreating to 15 percent on Friday.
System liquidity In its weekly review of financial markets, Afrinvest Plc explained: “System liquidity oscillated during the week, closing the first trading day with a negative balance of N175.3 billion. The largest withdrawal from system liquidity occurred on Tuesday as the CBN announced FX forwards sales worth $370.0m which saw money market rates (OBB and OVN) close the day at 128.3 per cent and 132.0 per cent respectively.
“On Wednesday rates moderated to 30.8 per cent and 33.7 per cent but a further FX sales worth $230.0m by the CBN pressured Open Buy Back (OBB) and Over-Night ( OVN) rate to 111.6 per cent and 133.3 per cent on Thursday. OBB and OVN rates settled at 13.1 per cent and 14.1 per cent respectively on Friday, down 4.7 per cent and 4.5 per cent week-on-week(W-o-W) respectively.
“Performance in the Treasury Bills market was largely bearish due to tighter system liquidity during the week. Average yield trended higher on most trading sessions, up 36bps on Monday but eased by mid-week as system liquidity improved. Nonetheless, average rate raised 55 basis points (bps), week-on-week (W-o-W) closing at 16.9 per cent on Friday.
Demand for Eurobond persist: Meanwhile Nigeria’s Eurobond continued to enjoy price appreciation on the London Stock Exchange (LSE) due to persistent demand by foreign investors.
The 5-year, 5.3% $500 million JUL 12, 2018 bond, appreciated by $1.25 (yield fell to 4.94 per cent) while the 10-year, 6.38% $500 million JUL 12, 2023 bond appreciated by $2.08 (yield fell to 5.68 per cent). Also, the 10-year, 6.75 % $500 million JAN 28, 2021 bond gained $0.16 (yield dropped 3.59 per cent). Commenting on this development, Afrinvest Plc said: “Positive sentiments filtered across Sub-Saharan (SSA) sovereign instruments as yields fell across the Nigerian, Ghana, Gabon, Ivory Coast, Kenya, Zambia, Senegal, and South African instruments –save for the South African 2024 and 2041. The Nigerian 2023 instrument emerged the best performer under our coverage with a year-to-date (YTD) return of 6.4 per cent.
“Despite the downgrade of some Banks by Fitch Ratings Agency amid a successful issuance of the $1.00bn Nigerian Eurobond, the Nigerian Corporate Eurobonds have been experiencing positive sentiments. This week saw positive performance filter through a range of instruments as yields fell on all Corporate Eurobonds but for the ACCESS 2017 (yields rose 11bps) and FIRST BANK 2021(yields rose 2bps). Nonetheless, the DIAMOND 2019 remains the best performing with YTD return of 13.3 per cent.
Similar to the Treasury Bills market, sentiments in the local Bonds market was bearish this week as average yield closed higher on 4 out of 5 trading sessions. This was largely due to the relatively tight system liquidity as well as CBN’s FX forwards sales during the week. Eventually, average yield closed the week at 16.2 per cent indicating a 17bps appreciation W-o-W.”
House Reps warns contractors on CBN’s intervention projects The House of Representatives Committee on Banking and Currency last week warned contractors handling the various intervention projects of the CBN in the educational sector to stick to the specifications and timelines of the projects as contained in their contracts.
Chairman of the Committee, Hon. Jones Onyereri gave this warning at the of the committee’s oversight visit to the CBN’s project locations in Lagos State.
He said that the Committee would not accept any deviation from the contractual agreements nor agree to any variation to the contract sums.
The Committee however commended the CBN intervention projects in the educational sector affirming that it will add value to Nigeria’s economic development aspirations.
The intervention project sites visited by the Committee included the three blocks of two and three-storey hostel buildings and an adjourning 500-seater auditorium at the Administrative Staff College of Nigeria (ASCON), Topo, Badagry and the multi-complex faculty, hotel and auditorium facilities at the University Of Lagos Centre Of Excellence. The facilities are part of the CBN’s commitment to building Basking in the euphoria of the appreciation recorded by the naira last week, the Central Bank of Nigeria (CBN) has restated its commitment to exchange rate stability.
Speaking at the Guaranty Trust Bank Plc’s 2017 non-oil export workshop held in Lagos at the weekend, the Deputy Director Trade and Exchange Department of the CBN, Olu Vincent urged Nigerians to continue to support public policies.
He further stated that measures had been put in place to support businesses in the country, stimulate growth and grow the economy. Olu called on importers to ensure that the country benefits from what they are importing.
He said: “We (CBN) are going to do more to stabilise the value of the naira so that everybody is happy. The present government is trying to ensure that we consume what we produce locally.”
Reacting to an earlier appeal by an exporter for the federal government not to restore the export expansion grant (EEg), Vincent, said there was pressure on federal government to restore the EEG. According to him, although the CBN was against because it was being abused, but the central bank does not have the powers to prosecute.
Vincent said the federal government had disclosed plan to reintroduce the EEG. He assured the exporters that the CBN was committed to supporting their businesses.
The event which was organised by the GTBank brought together some of its key exporters to dialogue on issues affecting trade, forex and export activities, thereby providing sustainable headway for the exporters.
“Last year at the beginning of this crisis, the Governor of the CBN, Mr. Godwin Emefiele had a meeting with the exporters in Lagos. At the meeting, we discussed issues bothering on remittances, volatility in exchange rate and other issues. “Sadly, there was no sincerity of purpose amongst the people that came for that meeting. But today we can see some level of sincerity and discourse,” Vincent said.
“About 15 years ago, if you were an exporter and you didn’t repatriate your export proceeds based foreign exchange embargo, people started having the feeling that we were killing businesses.
“We decided that for the exporter, there must be Know-Your Customer (KYC) by the bank. The bank must know the account owner. We decided to shift the responsibility to commercial banks who know much of their own to make sure that the business keeps going.
Funds don’t come back to us. There are people that export with the intentions of not bringing back the funds to the country.”
He explained that under the new export regulation, if an exporter exports and doesn’t repatriate export proceed to the bank where the individual transacting business with, the bank would be sanctioned by the CBN, adding that the customer has a responsibility of bringing back the export proceed, therefore in order for the banks to accommodate the penalty from the banks they need to create a pool whereby until you repatriate the export proceeds you will not have access to the money.
Vincent stressed that the bank was supposed to know the customer very, because if the customer doesn’t bring back the export proceed, the bank would be sanctioned, while urging the bank to devise strategies to prevent them from incurring unnecessary loss.
Earlier, the Chief Executive Officer, Fullmark Commodity Limited, one of the leading commodities trading companies in the country, Sriram Venrateswaran advised the federal government not to restore the EEG.
Venrateswaran alleged that the EEG was abused by a lot of exporters in the country when it was operational, saying that a lot of companies that were not in the export business were actually collecting the grant.
This, according to him affected general exporters who could not get full value.
Furthermore, he alleged that most exporters joined the trade because they were getting 30 per cent grant from the federal government.
He however stressed the need for the federal government to fix the country’s infrastructure to stimulate economic activities.
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