Tuesday, February 07, 2012 10:44 AM / Dunn Loren Merrifield
During the week under review, Monetary Policy Committee’s decision to maintain policy rate given the need stabilize the economy and the Federal Account Allocation Committee (FAAC) inflow of about N559.1 billion were the major drivers in the fixed income market.
Following the outcome of the most recent FGN bonds auction, traders initially rallied the ten-year bonds into a positive territory considering that those bonds are the most attractive in the market currently. However, with the inflow of liquidity to the system as a result of FAAC disbursements, the CBN saw the need to control money supply by issuing about N195 billion worth of OMO bills with tenors ranging from 56 days to 251 days. This reversed the positive trend earlier witnessed after the MPC outcome forcing most trading bonds to close the week on a negative note (average -0.0069%) when compared to the opening prices at the start of the week.
The bond market also witnessed maturity of N125 billion worth of 9.92 Jan 30, 2012 which reduced the outstanding volume of FGN bonds to about N3.5 trillion.
The treasury bills secondary market was active as yields trended high at the end of the week due to the high marginal rates witnessed at the OMO auctions.
In the week ahead, we are looking forward to the issuance of treasury bills worth circa N149.3 billion with tenors of 91, 182 and 364 days whilst N212.9 billion is expected to mature during the week. In respect to the above, the market is expected to remain stable.
Disclaimer/Advice to Readers: While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the authors best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This article is published with the consent of Dunn Loren Merrifield, the author(s) for circulation to the online investment community in accordance with the terms of usage. Further enquiries should be directed to the author whose e-mail is Dunn Loren Merrifield Limited [Email: firstname.lastname@example.org] otherwise comments should be sent to email@example.com