Yields rise, as Naira challenge remain despite oil rally
Analysts say currency market liquidity in Nigeria is set to remain challenging in the second half of 2016 even as oil prices have rallied above $50 per barrel.
This is probably due to uncertainty regarding Nigerian oil output and the still negative FX environment in the country regarding central bank controls on free trading on the interbank FX market.
Meanwhile Nigeria’s central bank has sold about N283 billion ($877.11 million) worth of treasury bills to mop up liquidity, driving up interbank lending rates, traders said on Friday.
Overnight lending rates rose to 20 percent after the bills was sold but later dropped to 16 percent towards the market close because the banking system was still in credit to the tune of around N17.44 billion.
“We expect the market to open in the negative next week, given the volume of OMO bills sold, while the interbank lending rate is seen within the 18-20 percent range,” one dealer said.
The bank had earlier repaid N160.64 billion naira worth of matured bills but sold a higher amount to drain liquidity, traders said.
It sold the one-year bill on Friday at a rate of 18.5 percent.
The naira has weakened to as low as 485 per dollar on the black market in recent weeks while holding firm at around 355 on the official market, supported by CBN interventions.
NSE Trading Action
The value of shares traded on Nigeria’s exchange fell to $139 million, near the lowest since Bloomberg began compiling such data in 2009, as foreign investors shunned an economy battered by militant attacks on oil facilities and shortages of foreign-exchange.
In Kenya, with an economy an eighth the size of Nigeria’s but set to grow almost 6 percent this year, the value rose 4.2 percent from August to $152 million.
Access Bank Dollar Yield
The Minimum issue yield for Access Banks $350 million tranche under its U.S $1,000,000,000 Global Medium Term Note Programme is expected to be 9.0 percent.
On 3 October 2016, Access bank announced an Exchange Offer invitation to the current holders of the U.S $350,000,000 7.25% Guaranteed Notes due 2017 to offer any or all of their existing Notes for its new U.S dollar denominated fixed rate senior notes due 2021 which will be issued by the bank next week.
In September, the Central Bank of Nigeria (CBN) sold Open Market Operations (OMO) bills to soak up about N1.2 trillion, in a bid to curb speculation against the naira and shore up fixed income yields to attract investors.
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