| Bonds & Fixed Income |    3331 VIEWS  |
| Bonds & Fixed Income | |
| 3331 VIEWS | |
 |
Friday, February 08, 2019 07:40 PM / Zedcrest Capital
***AfDB projects 4% GDP growth for Africa
in 2019***
KEY
INDICATORS
|
Indicator |
Value |
Commentary |
|
Inflation |
11.44% |
As at January 16, 2019. A c.16bps increase
from 11.28% recorded in November 2018 |
|
MPR |
14.00% |
Left Unchanged for the 15th
Consecutive Time at the Jan. 22, 2019 MPC Meeting |
|
External Reserves |
$42.97bn |
As at February 7, 2019. A c.0.05% decrease
from $42.99bn on February 6, 2019 |
|
Brent Crude |
$61.57pb |
As at February 8, 2019. A c.1.22% decrease from $62.33pb
on February 7, 2019 |
Bonds
The
Bond market remained significantly bullish with yields compressing further by
c.11bps as market players continued to aggress offers on the mid to long end of
the curve. The buying interests are mostly linked to some offshore interests,
but some panic buying by locals have also accentuated the rate of decline in
yields which have now compressed by c.20bps w/w.
In
the coming week, the NBS is expected to release data for Q4 2018 GDP and Jan
2019 inflation. Whilst we expect the economic releases to show slightly
improved figures from previous levels, we expect investment appetite to be
slightly subdued as market players are expected to trade cautiously in view of
the elections scheduled to hold next weekend.
|
Benchmark FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
15.54 13-Feb-20 |
15.04 |
14.16 |
0.00 |
|
14.50 15-Jul-21 |
14.99 |
14.58 |
(0.05) |
|
16.39 27-Jan-22 |
14.89 |
14.33 |
0.01 |
|
14.20 14-Mar-24 |
14.56 |
14.19 |
(0.15) |
|
12.50 22-Jan-26 |
14.74 |
14.61 |
(0.11) |
|
16.29 17-Mar-27 |
14.77 |
14.58 |
(0.16) |
|
13.98 23-Feb-28 |
14.93 |
14.71 |
(0.08) |
|
12.15 18-Jul-34 |
14.69 |
14.50 |
(0.23) |
|
12.40 18-Mar-36 |
14.74 |
14.55 |
(0.11) |
|
16.2499 18-Apr-37 |
14.57 |
14.37 |
(0.25) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills
market turned slightly bullish with market players cherry-picking on attractive
yields around the mid tenors, in absence of an OMO auction by the CBN. Yields
were consequently lower by c.15bps on the day.
In the coming
week we expect yields to trend slightly higher as the CBN is expected to
sustain its spate of OMO and FX interventions in the market.
|
Treasury Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14-Feb-19 |
12.50 |
10.00 |
(1.00) |
|
14-Mar-19 |
12.50 |
10.00 |
0.50 |
|
4-Apr-19 |
11.25 |
11.10 |
0.10 |
|
2-May-19 |
11.50 |
10.00 |
(1.45) |
|
13-Jun-19 |
12.95 |
11.75 |
(0.80) |
|
18-Jul-19 |
12.95 |
12.75 |
(0.35) |
|
1-Aug-19 |
14.50 |
14.30 |
(0.25) |
|
12-Sep-19 |
14.80 |
14.50 |
(0.10) |
|
3-Oct-19 |
14.95 |
14.80 |
0.00 |
|
14-Nov-19 |
14.90 |
14.80 |
(0.10) |
|
5-Dec-19 |
15.00 |
14.75 |
0.00 |
|
2-Jan-20 |
15.00 |
14.90 |
0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market remained elevated on the back of the significant OMO mop up
in the previous session. The OBB and OVN rates consequently ended the session
slightly higher at 18.67% and 19.42% respectively.
We
expect rates to trend higher opening next week, as the CBN is expected to
resume its week wholesale FX intervention amid an already tightened system
liquidity environment.
|
Money
Market Rates |
||
|
|
Current
(%) |
Previous
(%) |
|
Open
Buy Back (OBB) |
18.67 |
17.33 |
|
Overnight
(O/N) |
19.42 |
18.42 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
unchanged at N306.70/$ (spot) and N357.10/$ (SMIS). The NAFEX rate in the
I&E window depreciated marginally by c.0.02% to N361.73/$, whilst the cash
and transfer rates at the parallel market remained unchanged at N359.20/$ and N365.00/$
respectively.
|
FX
Market |
||
|
|
Current
(N/$) |
Previous
( N/$) |
|
CBN
Spot |
306.70 |
306.70 |
|
CBN
SMIS |
357.10 |
357.10 |
|
I&E
FX Window |
361.73 |
361.64 |
|
Cash
Market |
359.20 |
359.20 |
|
Transfer
Market |
365.00 |
365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns retreated further in today’s session, with yields
trending higher by c.9bps as news of a slowdown in the US-China trade
negotiations weighed on risk sentiments in the market.
In the NGERIA Corps, yields were relatively flat across board, we however
witnessed slight sell interests on the UBANL and FIDBAN 22s, whilst investors
were better buyers of the 2021 maturities.
Related News
1.
NAFEX Rate
Appreciates to Six Month High Amid Renewed FPI Inflows
2.
A Quiet Trading Session as Daily OMO Auction Takes Centre
Stage
3.
Market Players Oversubscribe CBN OMO Amid Increased Demand
on Short Tenor Bills
4.
NSP-SPV Plc Up to N10Billion 15-Year Series 1 Guaranteed
Fixed Rate Senior Green Infrastructure Bond
5.
Buoyant Liquidity Level Spurs Buying Interest as Average
Yield Compresses to 13.2%WoW
6.
Bond Market Closed On A Bullish Note With Increased Demand
Seen On Most Maturities
7.
February 2019 FGN Savings Bonds Offer For Subscription
8.
Bond Yields Break Key Support amid Renewed Offshore
Interests
9.
Massive Rally on Eurobonds as US FED Strikes Dovish Tone
10. Summary of
January 2019 FGN Bond Auction Results
11. Bond Auction Rates Clear Lower With Increased Demand on
the 10-yr
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