Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Monday, February 04, 2019 01:32PM /
Anchoria AM Research
Money Market
The
money market rate decreased last week as the Overnight rate (OVN) and Open Buy
Back (OBB) fell to 11.86% and 11.07% respectively. Consequently, the average
money market rate fell by 1.08% to settle at 11.47% due to the increase in the
System liquidity to cN666bn from N86bn in the previous week. Major inflow for
the week included: FAAC payment of cN310bn; NTB repayment of cN254.64bn; OMO
repayment of cN368bn while Outflow for the week included: Bond Auction
settlement of cN116.99bn; Bi-weekly Retail FX Auction of cN360bn; OMO sales of
cN585bn; Weekly Wholesale, Invisible and SME FX auction of $210mn and NTB
auction of cN254.63bn.
We
expect the rate to close higher this week barring as significant inflow as CBN
prepared for another round of FX auction on Monday and anticipated OMO auctions
during the week.
Instrument |
25/01/2019 |
01/02/2019 |
Change |
OBB |
12.08% |
11.07% |
-1.01% |
OVN |
13.00% |
11.86% |
-1.14% |
Forex: USD/NGN
The
CBN Official rate continued its downward trend to close at N306.75/$, a 0.02%
decrease. However, the rate in the Investors and Exporters’ FX Window rose
marginally by 0.07% to close at N362.71/$. We observed a reduction in the
market turnover in the I&E Window to $0.81 billion during the week from
$1.26 billion in previous week. However, Naira at the parallel market
depreciated marginally to close at N364.50/$ (using the Everdon BDC Rate).
We expect rates in the parallel market to remain constant as the apex
bank continues to supply FX into the market, coupled with its frequent
Wholesale and Retail SMIS programme.
25/01/2019 |
01/02/2019 |
Change |
|
CBN Official Rate |
306.80 |
306.75 |
-0.02% |
I&E FX Window |
362.46 |
362.71 |
+0.07% |
Everdon BDC Rate |
364.50 |
361.00 |
-0.96% |
Source:
Anchoria AM Research, FMDQ OTC
Commodities
The Brent Crude Oil and WTI Crude Oil rose by 2.92% and 1.80% to close
at $62.75 and $55.26 per barrel respectively due to the following factors:
a)
US
sanctions on Venezuela’s Stated Owned Oil Firm
b)
Decline
in OPEC Production
c)
Decline
in the number odd active US Oil rigs.
Fixed Income
Bond:
FGN
The
Bond Market closed on a bullish note last week with increased demand seen on
most maturities during the week. Notable amongst them include 2021s (59bps) and
2034s (50bps). Average yields fell by 33bp to close the week at 14.91%.
The Bond Auction during the week witnessed a subscription rate of 131.39% with
the subscription in favour of longest tenor bond (FEB 2028). The marginal rate
for all tenors fell below the rates in previous auction. (See the details
below).
We
anticipate the current trend on increased demand to persist in the earlier of
the week.
January Bond Auction Results
Secondary
Market
Source:
Anchoria AM Research, FMDQ OTC
Treasury
Bills
Despite
the increase in system liquidity during the week, the treasury bills market
traded on a flat note. Consequently, the average yield rose by 1bps to close
the week at 14.40%.
T-Bills
Auction Result
Secondary
Market
Source:
Anchoria AM Research, FMDQ OTC
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