| Bonds & Fixed Income |    4688 VIEWS  |
| Bonds & Fixed Income | |
| 4688 VIEWS | |
 |
Thursday, January 03, 2018/ 06:24AM / Zedcrest Capital
***Total Begins Production at Egina Oil Field***
KEY
INDICATORS
|
Indicator |
Value |
Commentary |
|
Inflation |
11.28% |
As at December 14, 2018. A c.2bps increase from 11.26% recorded
in October 2018 |
|
MPR |
14.00% |
Left Unchanged for the 12th Consecutive Time at the
Nov. 22, 2018 MPC Meeting |
|
External Reserves |
$43.20bn |
As at December 28, 2018. A c.0.07% decrease from $43.23bn on
December 27, 2018 |
|
Brent Crude |
$55.51pb |
As at January 2, 2019. A c.2.51% increase from $54.15pb on December 31, 2018 |
Bonds
In line with our expectations, the Bond market retraced sharply by
c.18bps in the first trading session of the year, following slight sell off
around the mid tenors. The highest uptick was witnessed on the 2024s (+71bps)
which was rallied in the previous week.
We expect yields to still inch higher as market players anticipate
release of the Q1 FGN Bond calendar, with the release of the Q1 NTB calendar
pointing to a relatively robust level of issuance by the DMO.
|
Benchmark
FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
|
15.54 13-Feb-20 |
15.29 |
14.73 |
0.16 |
|
14.50 15-Jul-21 |
15.72 |
15.48 |
0.09 |
|
16.39 27-Jan-22 |
15.12 |
14.75 |
0.00 |
|
14.20 14-Mar-24 |
15.17 |
14.91 |
0.71 |
|
12.50 22-Jan-26 |
15.75 |
15.57 |
0.28 |
|
16.29 17-Mar-27 |
15.63 |
15.51 |
0.18 |
|
13.98 23-Feb-28 |
15.69 |
15.57 |
0.13 |
|
12.15 18-Jul-34 |
15.65 |
15.40 |
0.15 |
|
12.40 18-Mar-36 |
15.70 |
15.40 |
0.10 |
|
16.2499 18-Apr-37 |
15.57 |
15.41 |
0.00 |
Source: Zedcrest Dealing
Desk
Treasury
Bills
The
T-bills market was slightly bullish with yields moderating across the short and
mid tenors as market players cherry-picked on some of the attractive yields in
absence of an OMO auction and relatively smaller amount of NTB offerings at the
Auction, given that the DMO had earlier signalled its intention to repay
c.N85bn maturities at the first auction of the year. As contained in the NTB
calendar released by the DMO, it intends to rollover all other NTB maturities
in Q1 2019.
The DMO
consequently sold the total amount of c.N74.84bn it offered at today’s auction,
with stop rates maintained across all tenors except the 364-day which advanced
by c.5bps to 14.50%. Demand at the auction was moderately robust, with a bid to
cover ratio of 1.53X.
We expect
yields to trend higher, as the CBN is expected to resume its spate of OMO
interventions in the market to mop up c.N584bn in OMO maturities.
|
|
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
|
3-Jan-19 |
15.50 |
13.00 |
(0.75) |
|
14-Feb-19 |
17.00 |
14.50 |
0.50 |
|
14-Mar-19 |
13.50 |
11.00 |
(1.50) |
|
4-Apr-19 |
13.00 |
12.50 |
(2.50) |
|
2-May-19 |
13.50 |
12.50 |
(1.50) |
|
13-Jun-19 |
14.00 |
13.00 |
(1.00) |
|
18-Jul-19 |
14.50 |
14.00 |
(0.50) |
|
1-Aug-19 |
15.00 |
14.00 |
(1.00) |
|
12-Sep-19 |
15.00 |
14.00 |
(0.05) |
|
3-Oct-19 |
14.90 |
14.60 |
(0.60) |
|
14-Nov-19 |
15.05 |
14.90 |
0.05 |
|
5-Dec-19 |
15.50 |
13.00 |
(0.75) |
Source:
Zedcrest Dealing Desk
Money
Market
Rates in the
money market remained relatively unchanged from their previous levels, with the
OBB and OVN rates opening the year at 18.33% and 19.42%. System liquidity also
opened at c.N120bn.
Rates are
expected to trend lower tomorrow due to expected inflows of c.N690bn from OMO
and Net PMA repayments. This is however barring a significant OMO sale by the
CBN.
|
Money Market Rates |
||
|
|
Current (%) |
Previous (%) |
|
Open Buy Back (OBB) |
18.33 |
19.00 |
|
Overnight (O/N) |
19.42 |
20.17 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD rate
remained unchanged at N306.95/$ (spot) and N358.13/$ (SMIS), while the NAFEX rate
in the I&E window depreciated by c.0.11% to N364.41/$ from N364.00/$
previously. At the parallel market, the cash rate appreciated firmly by c.0.33%
to N358.80/$, while the transfer rate remained unchanged at N364.00/$.
|
FX Market |
||
|
|
Current (N/$) |
Previous ( N/$) |
|
CBN Spot |
306.95 |
307.00 |
|
CBN SMIS |
358.31 |
358.31 |
|
I&E FX Window |
364.41 |
364.00 |
|
Cash Market |
358.80 |
360.00 |
|
Transfer Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
The NGERIA Sovereigns resumed the year on a
bearish note, following slight mostly around the mid tenors (27s -31s). Yields
consequently trended higher by c.8bps on the day.
In the NGERIA Corps, investors resumed buying
the FBNNL 21s, Access 21s Snr and the Zenith 19s and 22s. Demand however
remained weak for DIAMBK 19s, in the wake of its delisting from the NSE corporate
governance Index.
Related News
1. Despite Year End
Funding Pressures, CBN Maintains OMO and FX Interventions
2. Naira Crashes Below N360 Per Dollar at the Parallel Market
as External Reserves Resume Downtrend
3. Demand Pressures Force c.50bps Rally on 2024 FGN Bond
4. Money Market Rate Decreased As Overnight Rate Fell to
25.08%
5. Markets Close on a Quiet Note as Tight System Liquidity
pushes Funding Rates Higher
6. Investors Look To Secondary Market To Fill Unmet Demand At
Previous Day’s Auction
7. Summary of December 2018 FGN Bond Auction Results
8. DMO’s Weak Borrowing Appetite Forces 10-yr Auction Rate
33bps Lower
9. DMO to offer N70bn FGN Bonds tomorrow as N100bn FGN Sukkuk
Bond Offer Closes
Signup with Facebook
Signup with Twitter
