Bonds & Fixed Income | |
Bonds & Fixed Income | |
3738 VIEWS | |
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Monday, September 10, 2018 /09:26PM /
Zedcrest Capital
***FG Shared N3.95tr Revenue with States, LGs in First
Half of 2018*** - NEITI
KEY
INDICATORS
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 |
$45.47bn |
As atSeptember 6,
2018. A c.0.18% decrease from $45.55bnon Sept. 5, 2018 |
Brent Crude |
$77.25pb |
As at September10,
2018. A c.1.44% decreasefrom$76.15pbon
Sept. 7, 2018 |
Bonds
The
Bond market traded with mixed sentiments, with continued interests seen
especially on the 2027s. The Broader market theme was however bearish, with
selloffs witnessed on the longer end of the curve (36s & 37s), which traded
as high as 15.51% and 15.47% respectively. Yields were consequently flat on the
day, with a marginal decline of c.1bp on average.
We
note that the recent resistance in yields has been largely driven by some
interests from local clients around the mid-tenured bonds. We expect an imminent
reversal to this trend, with yields still expected to maintain an uptrend in
view of recent developments in short term rates. We consequently maintain a
short biasacross the curve.
Secondary Market Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
15.54
13-Feb-20 |
14.07 |
13.91 |
(0.40) |
14.50
15-Jul-21 |
15.30 |
15.14 |
0.00 |
16.39
27-Jan-22 |
15.12 |
14.84 |
0.11 |
14.20
14-Mar-24 |
15.30 |
14.88 |
0.01 |
12.50
22-Jan-26 |
15.26 |
15.18 |
(0.04) |
16.29
17-Mar-27 |
15.16 |
15.10 |
(0.09) |
13.98
23-Feb-28 |
15.41 |
15.15 |
0.18 |
12.15
18-Jul-34 |
15.42 |
15.33 |
(0.07) |
12.40
18-Mar-36 |
15.51 |
15.20 |
0.11 |
16.2499
18-Apr-37 |
15.47 |
15.26 |
0.05 |
Source: Zedcrest Dealing Desk
Treasury Bills
Despite the significantly buoyant level of
system liquidity, the T-bills market remained significantly bearish with yields
trending higher by c.35bps across the curve. This came on the back of continued
selloffs across the short and mid-tenured bills, as market players anticipate
higher stop rates at the forthcoming Primary Market Auction for T-bills. We consequently
witnessed most bids by market players set as high as 13.00% on the short and
mid-tenured bills.
The CBN floated an OMO auction to manage the
excessive system liquidity levels. This was however met with an apathetic level
of demand, with no bids on the 73 and 136 day issues, while market players
bided as high as 13% for the 199day issue, with a total subscription of
N62.55bn of the N200bn offered. The CBN could however sell only a total of
N21.75bn as it maintained its stop rate at 12.50%.
The aforementioned posits strong signals for
higher rates in the T-bills market, and we expect this trend to persist, due to
expected funding pressures on the part of the DMO, as it looks to raise a total
of N136bn T-bills at its forthcoming auction.
Secondary Market Treasury
Bills
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
4-Oct-18 |
13.00 |
12.75 |
0.50 |
1-Nov-18 |
12.30 |
12.00 |
0.15 |
6-Dec-18 |
11.90 |
11.65 |
(0.60) |
3-Jan-19 |
13.00 |
12.75 |
0.50 |
14-Feb-19 |
13.00 |
12.75 |
0.35 |
14-Mar-19 |
12.60 |
12.35 |
0.00 |
4-Apr-19 |
12.50 |
12.25 |
(0.10) |
18-Jul-19 |
12.50 |
12.25 |
(0.05) |
Source: Zedcrest Dealing
Desk
The OBB and
OVN rates opened the week on a slightly higher note, closing the day at 4.17%
and 5.00% respectively. This came on the back of outflows for the CBN’s
wholesale FX (c.N75bn) and OMO interventions (N21.75bn). The Net System
Liquidity is consequently estimated at c.430bn as at close of business today.
We expect
rates to remain moderated, barring a significant OMO sale by the CBN in
subsequent sessions.
|
||
|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
4.17 |
2.83 |
Overnight
(O/N) |
5.00 |
3.42 |
FX Market
The Naira/USD rate depreciated slightly at
the interbank, closing at N306.25/$ from N306.20/$ previously. At the I&E
FX window, a total of $586.83mn was traded in 284deals, with rates ranging
between N353.00/$ - N364.00/$. The NAFEX closing rate depreciatedfurther by
c.0.09% to N363.11/$ from N362.78/$ previously.
At the parallel market, the cash and transfer
ratesremained stable to close at N359.40/$ and N361.50/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.25 |
306.20 |
CBN
SMIS |
358.87 |
358.87 |
I&E
FX Window |
363.11 |
362.78 |
Cash
Market |
359.40 |
359.40 |
Transfer
Market |
361.50 |
361.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
Gains in the NGERIA Sovereigns flattened out in
today’s session, with yields advancing by c.4bps across the curve. Investors
were slightly bearish on the short to mid end of the curve which lost about
0.30pct on average.
The NGERIA Corpswere conversely bullish, with renewed interests seen on the GRTBNL 18s, DIAMBK 19s and FBNNL 21s. Investors were however slightly bearish on the UBANL 22s, while the SEPLLN 23s marked some gains on the longer end.
Related
News
1. CBN Raises OMO Stop Rates, Succumbs to Investor Pressure PMA Holds this Wednesday
2. Average T-Bills Yield Rose by 15bps to Close the Week at 12.36%
3. Yields Trend Higher following Hike in CBN OMO Stop Rate
4. Central Bank makes a U-turn, raises rate to 12.50% for the 182days OMO Bills
5. System Liquidity support bullish interests in the Fixed Income Markets
6. External Factors Propel Yields to New Frontiers
7. Central Bank defies expectations, maintains rates at OMO auction
8. Bearish Sentiments Persist in Bond Market, amid Bargain Hunting by Local RMCs
9. Money Market Rate Decreased Marginally Last Week as Overnight Rate Fell to 6.83%
10. September 2018 FGN Savings Bond Offer for Subscription
11. Bond Market Closes the Month Bearish as EM Pressures Persist
12. Bond Yields Hit 9-Month High as CBN holds off on OMO Sale
13. Bond Yields to Break 15% Resistance, as DMO Clears 1yr PMA Bill at c.15% Effective Yield