Bonds & Fixed Income | |
Bonds & Fixed Income | |
4240 VIEWS | |
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Monday, March 18, 2019 07:40 PM / Zedcrest Capital
***Nigeria
spends $500m annually on palm oil importation *** - CBN
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.31% |
As at March 15, 2019. A c.6bps decline
from 11.37% recorded in January 2019 |
MPR |
14.00% |
Left Unchanged for the 15th
Consecutive Time at the Jan. 22, 2019 MPC Meeting |
External Reserves |
$43.05bn |
As at March 15, 2019. A c.0.14% increase
from $42.99bn on March 14, 2019 |
Brent Crude |
$67.45pb |
As at March 18, 2019. A c.0.10% increase from $66.98pb
on March 15, 2019 |
Bonds
We
witnessed mild buying interests in the FGN bond market following inflows of
c.N50bn from coupon payment on the 2027 bond. Yields were however relatively
flat, with a marginal compression of c.1bp on the day.
We
expect the market to remain relatively flat in the near term, due to the recent
slowdown in demand interests from RM clients. The market is also likely to tilt
to a slightly bearish stance ahead of the FGN bond auction to be held next
week.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.71 |
14.29 |
(0.02) |
16.39 27-Jan-22 |
14.58 |
14.28 |
0.00 |
12.75 27-Apr-23 |
14.55 |
14.43 |
(0.07) |
14.20 14-Mar-24 |
14.40 |
14.05 |
0.03 |
13.53 23-Mar-25 |
14.54 |
14.37 |
(0.07) |
12.50 22-Jan-26 |
14.40 |
14.30 |
(0.03) |
16.29 17-Mar-27 |
14.36 |
14.26 |
(0.08) |
13.98 23-Feb-28 |
14.35 |
14.23 |
0.01 |
12.15 18-Jul-34 |
14.37 |
14.15 |
0.03 |
12.40 18-Mar-36 |
14.30 |
14.14 |
0.04 |
16.2499 18-Apr-37 |
14.22 |
14.10 |
0.01 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively calm note and
was mostly order driven in absence of an OMO auction by the CBN. Yields
consequenlty compressed marginally by c.1bp to 13.30% on average.
We expect T-bill Yields to remain relatively stable,
barring a renewed OMO sale by the CBN tomorrow. Market players are also
expected to cherrypick on some relatively attractive bills, in anticipation of
client demand for the PMA scheduled for Wednesday.
Benchmark Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
4-Apr-19 |
13.00 |
10.00 |
0.00 |
2-May-19 |
11.55 |
10.00 |
0.15 |
13-Jun-19 |
11.70 |
11.50 |
0.05 |
18-Jul-19 |
12.50 |
12.00 |
0.00 |
1-Aug-19 |
12.10 |
11.95 |
0.00 |
12-Sep-19 |
13.15 |
13.00 |
(0.05) |
3-Oct-19 |
13.20 |
13.00 |
0.00 |
14-Nov-19 |
13.20 |
13.00 |
(0.05) |
5-Dec-19 |
13.00 |
12.90 |
(0.20) |
2-Jan-20 |
13.00 |
12.80 |
0.00 |
6-Feb-20 |
12.85 |
12.55 |
0.10 |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market remained relatively unchanged as inflows from coupon
payments (c.N50bn) cushioned the effects of today’s wholesale FX auction, with
system liquidity estimated to have closed the session at c.N75bn positive. The
OBB and OVN rates consequently ended the session at 10.58% and 11.58%
respectively.
We
expect rates to remain relatively stable tomorrow, barring a renewed OMO sale
by the CBN.
Money
Market Rates |
||
|
Current
(%) |
Previous
(%) |
Open
Buy Back (OBB) |
10.58 |
11.17 |
Overnight
(O/N) |
11.58 |
11.67 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
unchanged at N306.95/$ (Spot) and N356.92/$ (SMIS). The NAFEX closing rate in
the I&E window however weakened by 0.02% to N360.61/$, as market turnover
fell by c.78% to $101m. At the parallel market, the cash rate improved slightly
to N357.80/$, while the transfer rate remained unchanged at N364.00/$.
FX
Market |
||
|
Current
(N/$) |
Previous
( N/$) |
CBN
Spot |
306.95 |
306.95 |
CBN
SMIS |
356.92 |
356.92 |
I&E
FX Window |
360.61 |
360.18 |
Cash
Market |
357.80 |
358.00 |
Transfer
Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained firmly bullish, with yields trending
lower by c.11bps on the day. We witnessed the most interests around the mid
tenors (25s – 31s) which gained about 0.50pct on the day.
In the NGERIA Corps, we witnessed renewed interests on the UBANL 22s,
following the relatively positive results from its 2018 published financial report.
We also witnessed firm interests on the FIDBAN 22s which gained c.0.20pct on
the day.
Related News
1.
Money Market
Rate Increased As Overnight Rate Rose To 11.67%
2. Bond Market Trades Flat, Despite Inflation Dip
3.
CBN Delivers Further Cut to Stop Rate in c.N400bn OMO Sale
4.
Robust Demand Sees Significant Drop in T-bills Yields at
The PMA
5.
One Year T-bill to Clear Significantly Lower at PMA
Tomorrow
6.
Nigerian Eurobonds Turn Bullish as Oil Prices Move Higher
7.
Increased OMO Mop-Ups by CBN Drive T-Bills Average Yield
up to 13.5% as PMA Holds this Wednesday
8.
Money Market Rate Decreased As Overnight Rate Fell To
10.08%
9.
Monthly Fixed Income Review For February 2019
10. T-Bill Yields
Trend Lower as CBN Holds off on Long Tenor OMO Offer
11. Fixed Income Monthly Update February 2019 - Lower Yields
To Take Center Stage