18032019 - APC, PDP attack INEC over Bauchi, Adamawa gov polls

Vanguard, MONDAY, MARCH 18, 2019 — 21
FINANCIAL VANGUARD
Decline in TB rates to persist as foreign investors trigger 575%
oversubscription
Continues from Page 19
January 16.
The above trend is
driven by massive
oversubscription (excess
demand) for TBs fuelled
by foreign portfolio
investors seeking to take
advantage of the high
interest rate regime in the
nation’s fixed income
market.
This is reflected by the
88 percent increase in
dollar injection by foreign
portfolio investors
through the Investors
and Exporters (I&E)
foreign exchange
window, which rose
to $3.07 billion in the first
two months of the year
(January and February)
from $1.63 billion in
Q4’18.
This massive inflow
triggered 532 percent
oversubscription in the
primary market TBs
auction held by the CBN
on February 27. The CBN
offered and sold N115
billion worth of TBs while
total subscription stood at
N727.35 billion.
This trend was repeated
last week, with the
primary market auction
recording 575 percent
oversubscription. While
the CBN offered and sold
N89 billion worth of bills,
total subscription
(investors demand) stood
at N600.52 billion.
Confirming this
development, analysts at
Lagos based Cowry Asset
Management Limited
said: “Amid demand
pressure from the foreign
portfolio investors, we
saw stop rates fall across
tenor days: 91-day, 182-
day and 364-day
maturities.”
They projected that the
huge demand for TBs will
persist this week when
the CBN offers maturing
TBs worth 48.6 billion, as
well as further
moderation in stop rates.
“In the new week, CBN
will rollover T-bills worth
N48.57 billion, viz: 91-
day bills worth N3 billion,
182-day bills worth N8.39
billion and 364-day bills
worth N37.18 billion. We
expect their stop rates to
fall amid buy pressure.
Amid the N169.44 billion
bills maturing, we expect
yields to further moderate
given the declining stop
rates.”
In a bid to mop up the
excess liquidity from the
unmet demand for TBs in
the primary market
auction, the CBN on
Thursday held secondary
market (Open Market
Operations, OMO) TB
auction, which recorded
23 percent
oversubscription. Total
public subscription to the
N350 billion worth of bills
offered by the apex bank
stood at N429.5 billion
while the apex bank sold
EXTERNAL RESERVES VS CRUDE OIL PRICE
N400.48 billion.
In response, cost of
funds rose marginally at
the end of the week with
average short term rates
rising by 1.8 basis points
(bpts).
Data from FMDQ
showed that interest rate
on Collateralised (Open
Buy Back, OBB) lending
rose by 2.0 bpts to 11.17
percent last week from
9.17 percent the previous
week. Similarly, interest
rate on Overnight
lending rose by 1.6 bpts
to 11.67 percent last week
from 10.08 percent the
previous week.
This trend may persist
this week in the face of
further liquidity mop by
the CBN in response to
maturing OMO bills
worth N169 billion during
the week.
External reserves hit
5weeks high at $43bn
The naira appreciated
further last week in the
I&E window as
the nation’s external
reserves rose to five
weeks high of $43 billion
on Thursday.
According to the CBN
the external reserves
recorded a weekly
increase of $381 million
last week to $42.987
billion from $42.606
billion on Thursday
March 7.
The $42.987 billion
recorded last week,
March 14 represents the
highest level since
February 6 when the
reserves peaked at
$42.991 billion. The rise
in reserves may be
unconnected to the huge
dollar inflow from foreign
investors through the I&E
window since the
beginning of the year.
Last week, the volume
of dollars traded in the
I&E window dropped by
58 percent to $1.7 billion
from $4.1 billion the
previous week.
However, the naira
sustained its upward
trend in the market since
last month. According to
FMDQ, the indicative
exchange rate dropped
further to N360.18 per
dollar last week from
N360.42 per dollar the
previous week,
translating to 24 kobo
appreciation for the
naira.
PRIMARY MARKET AUCTION RESULTS
INTERBANK INTEREST RATES