T-Bills Market Trades Bearish as Market Players anticipate Retail FX Funding

Proshare

Friday, January 04, 2018/ 06:18AM / Zedcrest Capital

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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

$43.07bn

As at January 2, 2018. A c.0.07% decrease from $43.12bn on December 31, 2018

Brent Crude

$55.47pb

As at January 3, 2019. A c.0.00% decrease from $55.51pb on January 2, 2018

 

Bonds

The Bond Market compressed marginally by c.3bps in today’s session, following slight interests on the 26s, 27s and 37s. Yields however remained much unchanged on other maturities.

 

We expect the market to close the week on a relatively quiet note, with an outlook for relatively higher yield levels in the coming week.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.24

14.73

(0.05)

14.50 15-Jul-21

15.73

15.43

0.01

16.39 27-Jan-22

15.12

14.77

0.00

14.20 14-Mar-24

15.17

14.95

0.00

12.50 22-Jan-26

15.68

15.63

(0.07)

16.29 17-Mar-27

15.59

15.51

(0.04)

13.98 23-Feb-28

15.69

15.54

0.00

12.15 18-Jul-34

15.64

15.40

(0.01)

12.40 18-Mar-36

15.69

15.42

(0.01)

16.2499 18-Apr-37

15.49

15.38

(0.08)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a bearish note with yields rising by c.12bps on average, following sell pressures on the shorter end of the curve in the wake of the OMO auction (c.425bn) by the CBN.

We expect the market to remain bearish tomorrow, as market players would be looking to provide funding for a retail FX intervention sale by the CBN.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

15.50

13.00

0.00

14-Mar-19

17.00

14.50

0.00

4-Apr-19

13.50

11.00

0.00

2-May-19

13.00

12.50

0.00

13-Jun-19

13.50

12.50

0.00

18-Jul-19

14.00

13.00

0.00

1-Aug-19

14.50

14.00

0.00

12-Sep-19

15.00

14.00

0.00

3-Oct-19

15.00

14.00

0.00

14-Nov-19

14.90

14.60

0.00

5-Dec-19

15.05

14.90

0.00

Source: Zedcrest Dealing Desk 


 

Money Market

Rates in the money market declined by c.4pct, with the OBB and OVN rates closing the day at 14.08% and 14.92%, as inflows from Net OMO and PMA repayments (c.N265bn) bolstered system liquidity to c.N385bn est. from c.N120bn opening the day.

Rates are expected to trend higher tomorrow, as the CBN is expected to debit banks for a retail FX interventions sale which estimated to mop up most of the available system liquidity.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.08

18.33

Overnight (O/N)

14.92

19.42

Source: FMDQ, Zedcrest Research  

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (spot) and N358.13/$ (SMIS), while the NAFEX rate in the I&E window depreciated further by c.0.24% to N365.30/$ from N364.41/$ previously. At the parallel market, the cash rate depreciated slightly by c.0.06% to N359.00/$, while the transfer rate remained unchanged at N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.31

358.31

I&E FX Window

365.30

364.41

Cash Market

359.00

358.80

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were flat except for slight interests seen on the 2047s and 2049s.

 

In the NGERIA Corps, investors slightly bullish on the DIAMBK 19s, Access 21 and FBNNL 21s, whilst we witnessed slight selloff on the FIDBAN 22s.


 Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.

 

 

Related News

 

1.       Bond Yields Retrace Sharply, As DMO Resumes NTB Auction Sales

2.      Despite Year End Funding Pressures, CBN Maintains OMO and FX Interventions

3.      Naira Crashes Below N360 Per Dollar at the Parallel Market as External Reserves Resume Downtrend

4.      Demand Pressures Force c.50bps Rally on 2024 FGN Bond

5.      Money Market Rate Decreased As Overnight Rate Fell to 25.08%

6.      Markets Close on a Quiet Note as Tight System Liquidity pushes Funding Rates Higher

7.      Investors Look To Secondary Market To Fill Unmet Demand At Previous Day’s Auction

8.     Summary of December 2018 FGN Bond Auction Results

9.      DMO’s Weak Borrowing Appetite Forces 10-yr Auction Rate 33bps Lower

10.  DMO to offer N70bn FGN Bonds tomorrow as N100bn FGN Sukkuk Bond Offer Closes

11.   Diamond Bank Eurobond Rallies 800bps Following Merger Announcement

12.  Average Yields on Long Term Bills Remain at Over 17.0% on Aggressive OMO Mop Ups

 Proshare Nigeria Pvt. Ltd.

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