Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Saturday, March 24, 2018 /6:00 AM / Zedcrest Capital
Funding rates Spike as CBN Mops up Excess System
Liquidity
***Nigeria States' Internally Generated Revenue Climbs 12% in 2017***
KEY
INDICATORS
Inflation |
14.33% |
Declined by 0.80% in February from 15.13% in January
2018 |
MPR |
14.00% |
Left unchanged at 14.00% at the MPC meeting of November
2017 |
External Reserves |
$45.36billion |
Accreted 1.54% as at 22 March from $45.20bn as at 21
March 2018 |
Brent Crude |
$69.45pb |
Rose by 1.17% from $68.65pb on 22 March 2018 |
Bonds
The bond market remained bearish
in today’s session with slight sell especially on the 2027s taking yields
higher by c.6bps for the second consecutive trading session. We however
witnessed some resistance when yields began to hit the 13.60% area, with slight
retracements on the 27s and 37s before the close of trading. We expect this
bearish trend to persist however, as demand for bonds remain relatively weak in
the market, with most support seen from offshore buyers.
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
16.00 29-Jun-19 |
13.71 |
13.64 |
0.08 |
15.54 13-Feb-20 |
13.56 |
13.49 |
0.03 |
14.50 15-Jul-21 |
13.59 |
13.52 |
0.04 |
16.39 27-Jan-22 |
13.59 |
13.52 |
0.13 |
14.20 14-Mar-24 |
13.56 |
13.49 |
0.05 |
12.50 22-Jan-26 |
13.69 |
13.62 |
0.12 |
16.29 17-Mar-27 |
13.63 |
13.56 |
0.06 |
12.15 18-Jul-34 |
13.53 |
13.46 |
0.00 |
12.40 18-Mar-36 |
13.46 |
13.39 |
0.05 |
16.25 18-Apr-37 |
13.36 |
13.29 |
0.02 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills Market traded on a
relatively quiet note, with very little in the way of flows, as the CBN resumed
its OMO auction, selling a total of c.N248bn of the 22-Nov bill. Yields
consequently stayed flat, compressing just slightly by 1bp on average. We
expect renewed buy sentiments in the coming week, as market players anticipate
significant fund inflows from retail FX refunds and FAAC and OMO T-bill
maturities later in the week. The CBN is however expected to increase its OMO
auction tempo, to calm liquidity pressures in the system.
Treasury
Bills |
|||
Description |
Bid
(%) |
Offer
(%) |
Day
Change (%) |
12-Apr-18 |
13.75 |
13.60 |
0.00 |
3-May-18 |
14.35 |
14.20 |
0.00 |
14-Jun-18 |
14.15 |
14.00 |
0.00 |
5-Jul-18 |
14.20 |
14.05 |
0.00 |
2-Aug-18 |
14.05 |
13.45 |
0.00 |
13-Sep-18 |
14.05 |
13.90 |
0.00 |
4-Oct-18 |
14.20 |
14.05 |
0.00 |
1-Nov-18 |
14.35 |
14.20 |
0.00 |
3-Jan-19 |
13.35 |
13.20 |
0.00 |
14-Feb-19 |
13.25 |
13.10 |
0.00 |
Source: Zedcrest Dealing Desk
OMO - 23 March 2018 |
||||
Tenor |
Rate
(%) |
Offer
(NBn) |
Sub
(N'bn) |
Sale
(N'bn) |
97
days |
12.60 |
50.00 |
0.037 |
0.037 |
244
days |
14.40 |
150.00 |
247.72 |
247.72 |
Source: CBN
The OBB and OVN rates spiked by
c.14 percent points back to their previous day levels, closing at 20.83% and
23.17% respectively. This came on the backdrop of a significant OMO sale by the
CBN c.N248bn and debits for bond auction settlement c.64bn. System liquidity is
consequently estimated to close at c.N60bn long, from a positive opening figure
of c.N370bn. We expect rates to remain elevated on Monday, due to expected
outflows for OMO and wholesale FX sales by the CBN.
Money
Market Rates |
||
|
Current
(%) |
Previous
(%) |
Open Buy Back (OBB) |
20.83 |
6.83 |
Overnight (O/N) |
23.17 |
8.08 |
Source: FMDQ, Zedcrest Researc
FX Market
The Interbank rate remained stable at its previous rate of N305.70/$, with the CBN’s external reserves recorded to have improved by 1.54% to $45.36bn as of 21 March. The NAFEX rate appreciated by 0.03% to N360.00/$, with total volume traded rising by 66% to $259m. Rates in the Unofficial market however depreciated by 0.03% to N361.20/$.
FX Rates |
||
|
Current
(N/$) |
Previous
( N/$) |
CBN Spot |
305.70 |
305.70 |
CBN SMIS |
330.00 |
330.00 |
I&E FX Window |
360.00 |
360.12 |
Parallel Market |
361.20 |
361.10 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns turned
bearish in today’s session, reversing gains witnessed in the previous session.
Yields rose by c.6bps on average with some selloffs especially on the 15– and
30-yr. Prices were also down by –0.3pts with the 47s losing as much as –0.6pts,
as the 18s, 27s and 47s edged closer to par.
The Nigerian Banks were
largely bearish on all tickers except, except for the FIBAN 18s which retraced
slightly from selloffs witnessed in previous sessions. Investors were mostly
bearish on the Access 21s Senior and the UBANL and FIDBAN 22s. The SEPLLN 23s was last traded at 99.75.
Contact us:
Dealing Desk: 01-6311667 Dayo: 07032208237 Seyi: 08023231396 Nnamdi: +2348133385000
Email: research@zedcrestcapital.com
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