Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Thursday, December 20, 2018/ 09:00PM / Zedcrest Capital
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 |
$43.12bn |
As at December 19, 2018. A c.0.12% increase from $43.08bn on
December 18, 2018 |
Brent Crude |
$54.29pb |
As at December 21, 2018. A c.2.27% decrease from $55.55pb on December 20, 2018 |
Bonds
The FGN Bond market traded on a
quiet note to end the week with little volumes going in throughout the trading
session. Investor sentiment weakened towards bond securities at current market
yields. Consequently yields increased by a paltry single basis point across the
curve to close the week.
We anticipate a very quiet FGN
bond market going into next week, with further weakening of the yield curve
expected as the demand flattens and some end-of-year profit taking trades
expected.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
15.29 |
14.50 |
0.00 |
14.50 15-Jul-21 |
15.61 |
15.42 |
0.00 |
16.39 27-Jan-22 |
15.12 |
14.90 |
0.02 |
14.20 14-Mar-24 |
15.09 |
14.97 |
0.00 |
12.50 22-Jan-26 |
15.76 |
15.64 |
0.07 |
16.29 17-Mar-27 |
15.61 |
15.46 |
0.00 |
13.98 23-Feb-28 |
15.64 |
15.49 |
0.00 |
12.15 18-Jul-34 |
15.61 |
15.44 |
(0.01) |
12.40 18-Mar-36 |
15.59 |
15.40 |
0.00 |
16.2499 18-Apr-37 |
15.49 |
15.33 |
0.00 |
Source: Zedcrest Dealing
Desk
Treasury Bills
The
T-bills market closed out the week on a bearish note, as tighter system
liquidity pressured yields on the NTB curve. Yields ticked higher by c.9bps on
the average across the NTB curve, despite the lack of an OMO auction offer by
the CBN on the day.
In the coming week, the CBN will likely resume its daily OMO Auction offering to manage expected inflows from FAAC payments and OMO maturities. Due to the holidays and reduced trading sessions, we expect the CBN to be aggressive in the volumes on offer as it keeps a tight lid on system liquidity.
|
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
3-Jan-19 |
15.25 |
14.60 |
(0.25) |
14-Feb-19 |
15.00 |
14.50 |
0.00 |
14-Mar-19 |
14.15 |
13.70 |
0.15 |
4-Apr-19 |
13.90 |
13.60 |
(0.10) |
2-May-19 |
13.90 |
13.55 |
0.00 |
13-Jun-19 |
13.70 |
13.45 |
0.10 |
18-Jul-19 |
14.00 |
13.75 |
0.25 |
1-Aug-19 |
14.50 |
14.25 |
0.50 |
12-Sep-19 |
15.10 |
14.85 |
0.10 |
3-Oct-19 |
15.00 |
14.90 |
0.00 |
14-Nov-19 |
15.00 |
14.70 |
0.20 |
5-Dec-19 |
15.05 |
14.85 |
0.05 |
Source:
Zedcrest Dealing Desk
Money
Market
Money Market
rates jumped higher by c.900bps as system liquidity tightened further on the
back of outflows for the FX retail intervention by the CBN and Bond auction
settlement. Open Buy-Back (OBB) and overnight (O/N) increased to 21.67% (from 13.58%)
and 25.08% (from 14.83%), with System Liquidity estimated to close in a negative
territory of c.N110bn.
We expect rates
to open significantly higher in the coming week, as market participants provide
funding for FX Wholesale interventions by the CBN. High funding rates should be
short-lived due to inflows from November FAAC payments as well as OMO
Maturities (N.588.89bn) expected later in the week. The CBN is also expected to
aggressively mop up the excess liquidity, resuming its daily OMO auction
offerings.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
21.67 |
13.58 |
Overnight (O/N) |
25.08 |
14.83 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD rate
remained unchanged at N306.95/$ (spot) and N359.24/$ (SMIS), while the NAFEX rate
in the I&E window appreciated marginally by c.0.01% to close the week at
N364.54/$ from N364.57/$ previously. Value traded at the I&E FX window increased
by c.35.15% day-on-day, with a total trade turnover of $432.44mm traded in 514
deals, with rates ranging between N338.00/$ - N366.00/$.
Seasonal supply support the
continued appreciation of the Naira at the parallel market. The cash rate appreciated
further by c.0.33% to close at N362.80/$, while the transfer rate remained
unchanged at N367.00/$.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.95 |
CBN SMIS |
359.24 |
359.24 |
I&E FX Window |
364.54 |
364.57 |
Cash Market |
362.80 |
364.00 |
Transfer Market |
367.00 |
367.00 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
The NGERIA Sovereigns witnessed a quiet
trading session, however with lower valuations as global oil prices continue to
decline. Yields ticked higher further by c.3bps on the average across the
curve.
Similarly,
the NGERIA Corps saw little interest
in the last trading session for the week, with no change recorded on the prices
of the tracked tickers.
Related News
1. Investors Look
To Secondary Market To Fill Unmet Demand At Previous Day’s Auction
2. Summary of December 2018 FGN Bond Auction Results
3. DMO’s Weak Borrowing Appetite Forces 10-yr Auction Rate
33bps Lower
4. DMO to offer N70bn FGN Bonds tomorrow as N100bn FGN Sukkuk
Bond Offer Closes
5. Diamond Bank Eurobond Rallies 800bps
Following Merger Announcement
6. Average Yields on Long Term Bills Remain at Over 17.0% on
Aggressive OMO Mop Ups
7. Average Market Rate Rose By 0.69% To Settle At 25.89% As
CBN Continued Its Liquidity Mop Up
8. T-Bills Market Ends Bearish as CBN Conducts Special OMO
Auction
9. Funding Rates Moderate, as Market Players Undersubscribe
CBN OMO
10. Bond Yields Pare Losses amid Renewed Local Demand