| Bonds & Fixed Income |    3289 VIEWS  |
| Bonds & Fixed Income | |
| 3289 VIEWS | |
 |
Friday, March 22, 2019 06:15 PM / Zedcrest Capital
***U.S.
Treasury Yield Curve Inverts for First Time since 2007***
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 |
$43.51bn |
As at March 20, 2019. A c.0.23% increase
from $43.41bn on March 19, 2019 |
|
Brent Crude |
$66.72pb |
As at March 22, 2019. A c.1.30% decrease from $67.60pb
on March 21, 2019 |
Bonds
The
FGN Bond market traded on a relatively flat note, with slight demand on the
short end of the curve compressing yields marginally by c.2bps on the day. We
also witnessed slight buys on the 2037s with trades at c.14.14%.
We
expect the market to remain relatively muted ahead of the FGN Bond auction
scheduled for the 27th whilst we expect the CBN to keep rates
unchanged at its MPC meeting scheduled for the 25th and 26th next
week.
|
Benchmark FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14.50 15-Jul-21 |
14.73 |
14.31 |
0.10 |
|
16.39 27-Jan-22 |
14.31 |
142.21 |
(0.11) |
|
12.75 27-Apr-23 |
14.61 |
14.30 |
(0.10) |
|
14.20 14-Mar-24 |
14.48 |
13.92 |
(0.01) |
|
13.53 23-Mar-25 |
14.45 |
14.37 |
(0.08) |
|
12.50 22-Jan-26 |
14.59 |
14.34 |
0.04 |
|
16.29 17-Mar-27 |
14.52 |
14.27 |
0.02 |
|
13.98 23-Feb-28 |
14.30 |
14.24 |
0.00 |
|
12.15 18-Jul-34 |
14.41 |
14.20 |
(0.02) |
|
12.40 18-Mar-36 |
14.31 |
14.12 |
(0.08) |
|
16.2499 18-Apr-37 |
14.23 |
14.12 |
(0.03) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively flat note as
buying interests were constrained by the tight system liquidity levels from the
signifcant OMO sale in the previous session. Market players are also trading on
a slightly cautious tone in anticipation of continued OMO auctions by the CBN.
We expect the market to remain constrained by system
liqudity pressures opening the new week, with the CBN expected to resume its
weekly wholsale FX auction. We also expect the CBN to maintain its spate of OMO
interventions to mop up increased inflows from FAAC payments and OMO maturities
expected towards the next weekend.
|
Benchmark Treasury Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
4-Apr-19 |
12.00 |
10.00 |
0.00 |
|
2-May-19 |
11.00 |
9.00 |
0.00 |
|
13-Jun-19 |
12.00 |
11.00 |
0.00 |
|
18-Jul-19 |
12.50 |
12.00 |
0.00 |
|
1-Aug-19 |
12.85 |
11.85 |
(0.15) |
|
12-Sep-19 |
13.30 |
13.00 |
0.00 |
|
3-Oct-19 |
13.25 |
13.00 |
0.05 |
|
14-Nov-19 |
13.25 |
13.05 |
0.05 |
|
5-Dec-19 |
13.25 |
13.05 |
(0.05) |
|
2-Jan-20 |
13.15 |
13.05 |
0.00 |
|
6-Feb-20 |
13.10 |
12.85 |
(0.10) |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market remained slightly elevated as system liquidity fell into
negative territory of c.N20bn following the significant OMO sale by the CBN in
the previous session. The OBB and OVN rates consequently ended the session at
14.25% and 14.83% respectively.
We
expect rates to remain elevated opening the new week, with System liquidity
expected to be further compressed by a wholesale FX auction by the CBN.
|
Money
Market Rates |
||
|
|
Current
(%) |
Previous
(%) |
|
Open
Buy Back (OBB) |
14.25 |
16.00 |
|
Overnight
(O/N) |
14.83 |
17.25 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
unchanged at N305.90/$ in the Spot market, while the SMIS rate was strengthened
by c.0.32% to N355.78/$. The NAFEX closing rate in the I&E window appreciated
marginally by 0.01% to N360.43/$, whilst the cash and transfer rates at the
parallel market remained unchanged at N358.00/$ and N364.00/$ respectively.
|
FX
Market |
||
|
|
Current
(N/$) |
Previous
( N/$) |
|
CBN
Spot |
306.90 |
306.90 |
|
CBN
SMIS |
355.78 |
356.92 |
|
I&E
FX Window |
360.43 |
360.47 |
|
Cash
Market |
358.00 |
358.00 |
|
Transfer
Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns weakened slightly in today’s sessions as fears of
a slowdown in global growth following weak manufacturing data from Germany and
the 3m - 10yr UST yield curve inversion weighed on risk assets. Yields were
consequently higher by c.5bps on the day.
Interests were relatively muted
in the NGERIA Corps, with slight
sell on the UBANL and ZENITH 22s.
Related News
1.
I and E Turnover
Rebounds to c.$700m as CBN Re-Issues Long Tenor OMO Bill
2.
Invest in FGN Monthly Bond Auction – March 2019
3.
PMA Stop Rates Clear c.40bps lower following c.530%
Oversubscription
4.
Access Bank Plc Holds Signing Ceremony for N15 Billion
Green Bond Issuance
5.
T-Bill Rates to Clear Lower at Tomorrow’s NTB Auction
6.
NAFEX Rate Weakens as Turnover Dips to c.$100m
7.
Money Market Rate Increased As Overnight Rate Rose To
11.67%
8.
Bond Market Trades Flat, Despite Inflation Dip
9.
CBN Delivers Further Cut to Stop Rate in c.N400bn OMO Sale
10. Robust Demand
Sees Significant Drop in T-bills Yields at The PMA
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