The Nigerian Senate passed a bill to amend the Central Bank of Nigeria Act, increasing the maximum allowable advances from the CBN to the federal government from 5% to 10%. Initially proposed at 15%, the limit was reduced to 10% to ensure fiscal discipline, following suggestions from several lawmakers. This amendment aims to provide the federal government with short-term funding to address budget deficits and finance critical projects. Senate leader Bamidele Opeyemi emphasized the importance of this bill for maintaining financial market stability, stimulating economic activity, and supporting sectors like agriculture, healthcare, and infrastructure development. Despite a motion to limit borrowing to capital expenditure, the bill was passed without this restriction, reflecting the urgent need for flexible funding options. Opeyemi highlighted that this is the first time both the executive and legislative branches have passed a budget with more capital than recurrent expenditure, urging support for the bill to facilitate significant national projects and economic rejuvenation.
Money Market
Market liquidity opened the day at ₦12.24 billion short. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 33.39% and 33.97%, respectively.
We expect rates to remain around current levels.
Treasury Bills Market
The FGN treasury bills market traded on an active note with demand skewed to the newly issued 24 July bill while offers remained scarce. At the PMA, the DMO offered and allotted N216.09bn across the standard maturities while total subscription stood at N486.86bn. Stop rates on the 91-day and the 182-day remained constant while the 364-day bill dipped by 21bps to 21.889%. Sequel to the auction, demand remained inclined to the newly issued 364 days with offers as low as 20.60%. In addition, it was quite a bullish close to the week with demand seen across the curve. We saw the 3 June quoted 26.00/25.40 while the 6/20 Feb bills were offered at 23.60% but bids remained far at the 25% handle.
We expect a similar session.
FGN Bond Market
The FGN Bonds Market commenced the week on a calm note. At the start of the week, trades were consummated on the 14.55% 2029 bond at 20.90% and the new 27s at 20.15%. On the last trading day, the Market witnessed a bullish run on the back of reduced supply with demand seen across the curve. We saw the new 33s and 34s offered at 21.60%. In addition, the new 27s and 31s exchanged hands at 19.70% and 20.90%, respectively.
We expect a similar trend, albeit at a modest pace.
FGN Eurobond Market
The FGN Eurobond market kicked off on bearish sentiments on the back of fears of recession. The oilers such as Nigeria and Angola led the underperformers. Data from the United States showed the ISM Services PMI at 51.4 vs 51 expected and 48.8 prev. However, we saw a rebound as investors believed the market to be oversold and considered current prices attractive. Following the release of the weekly Initial Jobless claims data which came in at 233K vs. 241k estimated and 250K previous, buying sentiments persisted as recessionary fears reduced.
We expect the bullish trend to persist.
Currency Market
The value of the Naira to the dollar appreciated by 2.65% to print at ₦1574.20/$ this week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
The local stock market saw another slight increase today, with the benchmark All-Share Index rising by 48 basis points to close at 98,592.12 points. The market ended the day with a capitalization of ₦55.99 trillion, bringing the year-to-date return to 31.85%. Market breadth was positive at 2.11x, with 38 stocks advancing and 18 declining.
The volume and value of traded stocks decreased by 39.70% and 46.00%, respectively, to 477.44 million units and ₦8.17 billion. The most actively traded equities by volume were Veritas Kapital (103.24 million units), OANDO (52.39 million units), and UBA (42.75 million units). In terms of value, the top traded stocks were OANDO (₦2.13 billion), ZENITH BANK (₦1.22 billion), and GTCO (₦1.02 billion).
