Bonds & Fixed Income | |
Bonds & Fixed Income | |
3920 VIEWS | |
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Thursday, September 05, 2018 /10:26PM / Zedcrest Capital
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.14% |
As at August15,
2018,9bps down from 11.23% recorded in June 2018. |
MPR |
14.00% |
Next MPC
meeting scheduled for September 24 & 25, 2018 |
External
Reserves |
$45.55bn |
As atSeptember 4,
2018. A c.0.17% decrease from $45.63bnon Sept. 3, 2018 |
Brent Crude |
$76.23pb |
As at September
6, 2018. A c.1.35% decrease,
from$77.27pbon Sept. 5, 2018 |
Bonds
The
FGN bond market remained largely order driven in today’s trading session as
Local Pension Funds and Asset managers continuedto look for decent bargain on
maturities with attractive yields. We witnessed significant trading activities
mostly at the long-end, with more trading volumes skewed towards the 2036s
& 2037s maturities. Consequently, yields across the curve compressed by
c.5bps to close at 15.06% on the average.
We
expect the market to trade cautiously tomorrow, with wide bid/offer spreads due
to the recent yield increase on the longest offered OMO T-bills (182days) by
the CBN.
Secondary Market Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
15.54
13-Feb-20 |
14.26 |
14.03 |
(0.22) |
14.50
15-Jul-21 |
15.00 |
14.99 |
(0.01) |
16.39
27-Jan-22 |
14.62 |
14.41 |
(0.02) |
14.20
14-Mar-24 |
15.07 |
14.89 |
0.04 |
12.50
22-Jan-26 |
15.23 |
15.16 |
(0.01) |
16.29
17-Mar-27 |
15.22 |
15.11 |
(0.02) |
13.98
23-Feb-28 |
15.17 |
15.10 |
(0.08) |
12.15
18-Jul-34 |
15.36 |
15.25 |
(0.06) |
12.40
18-Mar-36 |
15.35 |
15.20 |
(0.04) |
16.2499
18-Apr-37 |
15.36 |
15.22 |
(0.03) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a slightly
bearish note today with most trading activities skewed towards the short end of
the curve. The medium to long end of curve remained muted due to the floatation
of another OMO auction by the Central Bank of Nigeria (CBN).
The Apex Bankfloated another OMO auction
today in a bid to mop up inflows from corresponding maturing OMO T-bills and
lingering excess cash from FAAC disbursements. The CBN eventually succumbed to
investor pressure for higher yields amidst weak subscription, raising the stop
rate for the longest offered tenor (182days) to 12.50% (from 12.15% offered
previously). A total of N137.59bn was sold across the 63-, 126- and 182-day
maturities offered with stop rates printing at10.00%. 11.50% and 12.50%
respectively.
The shift in stop rates at the OMO auction will
likely lead to bearish sentiments in T-bills market especially at the medium to
long end of the curve. We expect a
lethargic trading session tomorrow to wrap up for the week.
OMO Auction Result |
||||
Tenor |
Rate (%) |
Offer (N’bn) |
Sub (N'bn) |
Sale (N'bn) |
63days |
10.00 |
100.00 |
34.30 |
34.30 |
126 days |
11.50 |
150.00 |
56.34 |
55.34 |
182 days |
12.50 |
300.00 |
100.09 |
100.09 |
Secondary Market Treasury
Bills
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
13-Sep-18 |
10.00 |
8.00 |
(0.05) |
4-Oct-18 |
11.10 |
10.95 |
0.15 |
1-Nov-18 |
11.25 |
10.85 |
0.30 |
6-Dec-18 |
11.55 |
11.40 |
0.10 |
3-Jan-19 |
11.80 |
11.55 |
(0.10) |
14-Feb-19 |
12.25 |
12.10 |
(0.05) |
14-Mar-19 |
12.10 |
12.05 |
(0.05) |
4-Apr-19 |
12.25 |
11.65 |
0.50 |
18-Jul-19 |
12.35 |
11.50 |
0.30 |
Source: Zedcrest Dealing
Desk
Interbank
lending rates remained relatively stable, as the OBB and OVN closed at 3.00%
and 3.83% respectively. System liquidity is estimated to close today at c.N600bn
net positive after the sale of a total of N189.73bn at the OMO auction today
which was not sufficient to offset corresponding inflows from N292.52bn OMO
maturities.
We expect rates
to close on a calm note, with no significant outflows expected closing the
week. This is however barring another OMO auction by the CBN due to the high
systemic liquidity.
|
||
|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
3.00 |
3.17 |
Overnight
(O/N) |
3.83 |
4.00 |
Source: FMDQ, Zedcrest Researc
FX Market
The Naira/USD rate traded stable at the
interbank, closing at N306.20/$ (Unchanged DoD). At the I&E FX window, a
total of $396.47mn was traded in 334deals, with rates ranging between N353.00/$
- N364.50/$. The NAFEX closing rate appreciated by c.0.09% to N362.73/$ from N363.04/$
previously.
At the parallel market, the cash rate closed
at N359.50/$ (c.0.08% lower), while the transfer rate remained stable at
N362.00/$.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.20 |
306.20 |
CBN
SMIS |
358.87 |
358.87 |
I&E
FX Window |
362.73 |
363.04 |
Cash
Market |
359.50 |
359.20 |
Transfer
Market |
362.00 |
362.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The bearish
sentiments on SSA sovereign bonds calmed today after being under attack since
the start of the month, and theNGERIA
Sovereignssaw better buyers on the day. Yields compressed by c.13bps, to
close at 7.43% on the average across the curve.
The NGERIA Corpssaw mixed trading
sentiments at today’s session, as demand continued on the short-dated tickers
while the longer-dated securities traded bearish.The GTBANK 18s gained 14bps
DoD, while the FIDBAN 22s conversely lost 14bps DoD.
Related
News
1. System Liquidity support bullish interests in the Fixed Income Markets
2. External Factors Propel Yields to New Frontiers
3. Central Bank defies expectations, maintains rates at OMO auction
4. Bearish Sentiments Persist in Bond Market, amid Bargain Hunting by Local RMCs
5. Money Market Rate Decreased Marginally Last Week as Overnight Rate Fell to 6.83%
6. September 2018 FGN Savings Bond Offer for Subscription
7. Bond Market Closes the Month Bearish as EM Pressures Persist
8. Bond Yields Hit 9-Month High as CBN holds off on OMO Sale
9. Bond Yields to Break 15% Resistance, as DMO Clears 1yr PMA Bill at c.15% Effective Yield
10. Bond Bulls Cherry-Pick on Higher Yielding Maturities as Market Maintains Balance