Bonds & Fixed Income | |
Bonds & Fixed Income | |
3693 VIEWS | |
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Wednesday, November 28, 2018/ 06:22AM / Zedcrest Capital
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.26% |
As at November 21, 2018. A c.2bps down from 11.28% recorded in
September 2018 |
MPR |
14.00% |
Left Unchanged for the 12th Consecutive Time at the Nov.
22, 2018 MPC Meeting |
External Reserves |
$41.83bn |
As at November 26, 2018. A c.0.55% decrease from $41.60bn on November
23, 2018 |
Brent Crude |
$59.98pb |
As at November 27, 2018. A c.0.13% decrease from $60.06pb on November 26, 2018 |
Bonds
Activity picked up in the Bonds
market, with mixed sentiments in today’s trading session today. Bargain hunting
by local clients dominated late trades across the mid-end of the curve, mostly
on the 2027s. Yields consequently compressed by c.1bps to close at 15.46% on
the average across the curve.
We expect the market to remain order driven with some client
demand expected on the mid- to long-end of the curve. We maintain cautious
outlook on bonds in light of weakening economic fundamentals and political
uncertainty.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
14.98 |
14.27 |
(0.02) |
14.50 15-Jul-21 |
15.36 |
15.24 |
0.01 |
16.39 27-Jan-22 |
14.99 |
14.54 |
0.04 |
14.20 14-Mar-24 |
15.17 |
15.02 |
(0.11) |
12.50 22-Jan-26 |
15.68 |
15.46 |
0.02 |
16.29 17-Mar-27 |
15.69 |
15.59 |
(0.01) |
13.98 23-Feb-28 |
15.90 |
15.82 |
0.00 |
12.15 18-Jul-34 |
15.71 |
15.58 |
0.00 |
12.40 18-Mar-36 |
15.58 |
15.43 |
(0.01) |
16.2499 18-Apr-37 |
15.58 |
15.44 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury
Bills
The T-bills market traded on a
relatively quiet note as market participants prepare for the NTBills PMA
scheduled for tomorrow. Yields consequently expanded by c.3bps on the average
across the NTB curve, with the short- and long-ends of the curve trading
slightly bearish on the day.
The last NTB Auction for the month is scheduled for tomorrow, with 91-, 182-
and 364-day maturities on offer. We expect stop rates to remain flat with the maturities
on offer already trading close to last stop rates in the secondary market. Please
see our forecast below:
PMA
Forecast |
|||
Maturity |
Volume
on offer |
Last
Stop Rates (%) |
Forecast
Range (%) |
91-days |
22.73bn |
10.95 |
10.90 - 11.05 |
182-days |
24.80bn |
13.16 |
13.00 - 13.20 |
364-days |
103.07bn |
14.45 |
14.40 - 14.55 |
|
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
6-Dec-18 |
12.70 |
12.60 |
0.15 |
3-Jan-19 |
12.75 |
12.60 |
0.10 |
14-Feb-19 |
13.00 |
12.85 |
0.00 |
14-Mar-19 |
12.90 |
12.70 |
(0.10) |
4-Apr-19 |
12.80 |
12.55 |
0.00 |
2-May-19 |
12.85 |
12.60 |
0.00 |
18-Jul-19 |
13.00 |
12.75 |
0.00 |
1-Aug-19 |
13.75 |
13.30 |
0.00 |
12-Sep-19 |
14.60 |
14.35 |
0.05 |
3-Oct-19 |
14.60 |
14.45 |
0.05 |
14-Nov-19 |
14.60 |
14.40 |
0.10 |
Source: Zedcrest Dealing Desk
Money
Market
Money Market
rates ticked higher as expected today as system liquidity remained relatively
tight. The OBB & O/N rates closed at 16.29% (from 15.17%) and 17.21% (from
15.75%) respectively. System liquidity is consequently estimated to close lower
at c.N139.24bn positive.
We expect funding
rates to trend lower closing the week due to expected FAAC inflows. This is
however barring any OMO auction by the CBN.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
16.29 |
15.17 |
Overnight (O/N) |
17.21 |
15.75 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD
rate remained unchanged to close at N306.80/$ (spot) and N359.81/$ (SMIS). At the
I&E FX window a total of $134.90bn was traded in 346 deals, with rates
ranging between N358.00/$ - N365.50/$. The NAFEX closing rate appreciated by
c.0.23% to close at N363.85/$ from N364.70/$ previously.
At the Naira/USD rate depreciated
at the parallel market segment, with the cash rate losing c.0.27% to close at N365.00/$
and transfer rates losing c.0.14% to close at N367.00/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.80 |
306.80 |
CBN SMIS |
359.81 |
359.81 |
I&E FX Window |
364.22 |
363.85 |
Cash Market |
365.00 |
364.00 |
Transfer Market |
367.00 |
366.50 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
Bad news for NGERIA Sovereign Eurobonds as yields
continued to trend northwards due to weak oil prices which trended lower again
today to close sub $60. We saw spreads drift wider with little or no volumes
traded. Yields expanded by c.23bps on the average across all the tickers on the
curve. The major losers on the day were the NGERIA 23s and 25s losing c.30bps and
c.32bps respectively. The NGERIA 49s is currently eyeing the double digit mark
(now at 9.89%), reflecting weak investor appetite on SSA bonds in general.
NGERIA Corps also had a weak showing on the day, with the Nigerian
banks’ papers losing their allure as a safe haven for Eurobond investors. We witnessed selling interests across the
DIAMBK, FIDBAN and ZENITH papers, which lost c.7bps, c.27bps and 64bps
respectively.
Related News
1.
Treasury Bill Auction Schedule For November 28th
2018
2.
Elevated Liquidity Levels Pressure Rates Lower
as PMA Holds on Wednesday
3.
Money Market Rate Decreased Marginally as
Overnight Rate Fell to 6.58%
4.
FSDH Research Spots Investment Opportunities in
FGN Savings Bonds for Low-Income Earners
5.
Crude Oil prices hit 1-year lows, investor
sell-offs hit Eurobonds
6.
Stanbic IBTC - Offer For Subscription Of N30b
Series 1 Senior Unsecured Fixed Rate Notes
7.
Monetary Policy Remains Unchanged With Minimal
Volatility Expected For The Fixed Income Market
8.
Summary of November 2018 FGN Bond Auction Results