Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Tuesday, September 29, 2018/ 06.19PM / Zedcrest Capital
***BPE to raise N300b for 2018 Budget funding*** – Okoh
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.28% |
As at October 16, 2018, 5bps up from 11.23% recorded in August
2018. |
MPR |
14.00% |
Left Unchanged for the 11th Consecutive Time at the
Sept. 25, 2018 MPC Meeting |
External Reserves |
$42.13bn |
As at October 29, 2018. A c.0.35% decrease from $42.28bn on October
26, 2018 |
Brent Crude |
$75.72pb |
As at October 29, 2018. A c.2.45% decrease from $77.62pb on October 26, 2018 |
Bonds
The bond market traded on
a relatively flat note, as supply pressures persisted, despite slight interests
from clients on some mid and long tenured bonds.
We expect yields to
maintain an uptrend, due to weaker client demand post the FGN Bond auction, and
the continued uplift in T-bill rates on the long end of the curve.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
14.69 |
14.16 |
0.05 |
14.50 15-Jul-21 |
15.40 |
15.05 |
0.00 |
16.39 27-Jan-22 |
14.86 |
14.39 |
0.00 |
14.20 14-Mar-24 |
15.30 |
15.02 |
(0.01) |
12.50 22-Jan-26 |
15.42 |
15.10 |
(0.02) |
16.29 17-Mar-27 |
15.44 |
15.36 |
(0.06) |
13.98 23-Feb-28 |
15.54 |
15.43 |
(0.01) |
12.15 18-Jul-34 |
15.57 |
15.20 |
(0.01) |
12.40 18-Mar-36 |
15.41 |
15.23 |
0.06 |
16.2499 18-Apr-37 |
15.27 |
15.14 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury
Bills
The T-bills market maintained a slightly bullish
posture, with yields moderating further by c.5bps on average. This came on the
back of inflows from FAAC payments which bolstered system liquidty
considerably, with the most interests from market players seen on the Jan –
March maturities.
We expect the market to trade on a relatively calmer
note in tomorrow’s session, as market players position for the NTB auction,
where the CBN intends to rollover a total of c.N145bn in NTB maturities. Rates
are expected to clear considerably higher, especially on the 364-day, due to
the double hike in OMO stop rates from
the last NTB auction.
PMA Expectations – 31 October 2018 |
|||
Tenor |
Offer (N'bn) |
Expected Rate (%) |
Previous Rate (%) |
91 days |
9.54 |
11.00 - 11.20 |
10.96 |
182 days |
47.71 |
12.70 - 12.90 |
12.69 |
364 days |
88.04 |
14.00 - 14.20 |
13.45 |
Source:
Zedcrest Research
Benchmark FGN Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
6-Dec-18 |
12.90 |
12.55 |
(0.10) |
3-Jan-19 |
12.90 |
12.55 |
(0.35) |
14-Feb-19 |
12.90 |
12.75 |
(0.15) |
14-Mar-19 |
12.85 |
12.65 |
(0.15) |
4-Apr-19 |
12.95 |
12.70 |
0.20 |
18-Jul-19 |
13.10 |
12.55 |
0.00 |
1-Aug-19 |
13.70 |
13.50 |
0.00 |
12-Sep-19 |
14.15 |
14.10 |
(0.20) |
3-Oct-19 |
14.35 |
14.15 |
(0.15) |
Source: Zedcrest Dealing Desk
Money
Market
In line with
our expectations, the OBB and OVN rates moderated by c.5pct to 9.50% and 10.33%
respectively. This came on the back of inflows from FAAC payments (c.N382bn),
estimated to have bolstered system liquidity to c.N490bn from c.N110bn opening
today.
We expect
rates to remain relatively stable tomorrow, as there are no significant
outflows expected.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
9.50 |
14.83 |
Overnight (O/N) |
10.33 |
15.50 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD
rate remained stable at N306.60/$ (spot) and N362.82/$ (SMIS). At the I&E
FX window, the NAFEX closing rate appreciated further by c.0.07% to N363.32/$
from N363.58/$ previously. Rates were
however unchanged at the parallel market segment, with the cash and transfer
rates closing at N361.00/$ and N364.00/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.60 |
306.60 |
CBN SMIS |
362.82 |
362.82 |
I&E FX Window |
363.32 |
363.58 |
Cash Market |
361.00 |
361.00 |
Transfer Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
The NGERIA Sovereigns weakened in today’s
session, with yields trending higher by c.7bps. The weakest bonds on the day
were the 2038s and 2047s which lost c.0.80pp.
The NGERIA Corps were slightly bullish,
with interests seen on the DIAMBK 19s, ACCESS 21s Snr and UBANL 22s. We however
saw better sellers on the FBNNL 21s.
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