| Bonds & Fixed Income |    3721 VIEWS  |
| Bonds & Fixed Income | |
| 3721 VIEWS | |
 |
Thursday, March 28 2019 07:50 PM / Zedcrest Capital
***FG
launches Micro Pension Plan for informal sector***
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 |
13.50% |
Cut by 50bps to 13.50% at the Mar.
26, 2019 MPC Meeting |
|
External Reserves |
$44.14bn |
As at March 26, 2019. A c.0.23% increase
from $44.04bn on March 25, 2019 |
|
Brent Crude |
$66.77pb |
As at March 29, 2019. A c.0.64% decrease from $67.20pb
on March 28, 2019 |
Bonds
The
FGN Bond market traded on a relatively flat note despite the significant cut in
stop rates at yesterday’s auction. We witnessed slight demand on the short end
of the curve (23s & 24s) countered by some profit taking on the 2028s which
trended higher by c.20bps on the day, (having compressed significantly in the
previous session). Yields were consequently unchanged on the day, closing at
c.14.30% on average.
We
expect yields to trend slightly upwards due to the recent profit taking
sentiments in the market. We should however witness some renewed demand if the
CBN maintains a hold on OMO sales.
|
Benchmark FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14.50 15-Jul-21 |
14.47 |
13.94 |
0.00 |
|
16.39 27-Jan-22 |
14.41 |
13.98 |
0.10 |
|
12.75 27-Apr-23 |
14.12 |
13.90 |
(0.08) |
|
14.20 14-Mar-24 |
14.32 |
13.91 |
(0.14) |
|
13.53 23-Mar-25 |
14.29 |
14.07 |
0.04 |
|
12.50 22-Jan-26 |
14.34 |
14.13 |
(0.09) |
|
16.29 17-Mar-27 |
14.35 |
14.16 |
0.00 |
|
13.98 23-Feb-28 |
14.30 |
14.12 |
0.21 |
|
12.15 18-Jul-34 |
14.24 |
14.08 |
(0.09) |
|
12.40 18-Mar-36 |
14.30 |
14.05 |
0.02 |
|
16.2499 18-Apr-37 |
14.23 |
14.07 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market
Market players anticipate a renewed OMO auction by the
CBN tomorrow, due to expected inflows from FAAC payments. We expect the market
to trade slightly bearish if this occurs.
|
Benchmark Treasury Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
4-Apr-19 |
11.50 |
5.00 |
0.00 |
|
2-May-19 |
11.00 |
9.00 |
0.00 |
|
13-Jun-19 |
12.00 |
11.00 |
0.00 |
|
18-Jul-19 |
12.20 |
11.30 |
0.00 |
|
1-Aug-19 |
12.10 |
11.85 |
(0.10) |
|
12-Sep-19 |
13.25 |
13.00 |
0.05 |
|
3-Oct-19 |
13.10 |
13.00 |
0.05 |
|
14-Nov-19 |
13.20 |
13.10 |
(0.20) |
|
5-Dec-19 |
13.15 |
12.90 |
0.05 |
|
2-Jan-20 |
13.10 |
13.05 |
0.00 |
|
6-Feb-20 |
13.05 |
12.95 |
0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market declined by c.5pct as inflows from retail FX refunds
bolstered system liquidity which opened the day at c.N80bn positive. The OBB
and OVN rates consequently ended the session at 10.07% and 10.71% respectively.
We
expect rates to trend slightly higher tomorrow, due to expected outflows for
Bond auction debits, a possible OMO sale and Retail FX provisioning by banks.
|
Money
Market Rates |
||
|
|
Current
(%) |
Previous
(%) |
|
Open
Buy Back (OBB) |
10.07 |
15.14 |
|
Overnight
(O/N) |
10.71 |
15.50 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
unchanged at N306.95/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in
the I&E window depreciated further by 0.03% to N360.80/$, whilst market
turnover improved by 74% to $203m. At the parallel market, the cash rates
depreciated further by 0.03% to N358.30/$ whilst the transfer rate remained
unchanged at N364.00/$ respectively.
|
FX
Market |
||
|
|
Current
(N/$) |
Previous
( N/$) |
|
CBN
Spot |
306.95 |
306.95 |
|
CBN
SMIS |
355.78 |
355.78 |
|
I&E
FX Window |
360.80 |
360.68 |
|
Cash
Market |
358.30 |
358.20 |
|
Transfer
Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained slightly bearish, with yields higher by
c.3bps on the day. Investors however showed renewed interest for duration plays
on the longer end of the curve (47s and 49s).
In the NGERIA Corps, we witnessed interests mostly on the DIAMBK 19s and
FIDBAN 22s
Related
News
1.
Summary of March 2019 FGN Bond Auction Results
2.
Bond Auction Rates
Crash by 125bps Following N92bn Non-Competitive Sales
3.
Renewed Bullish
Sentiments Anticipated Following MPR Cut
4.
Funding Rates Spike
as Banks Fund for CBN’s Wholesale Auction
5.
Average Money Market
Rate Rose By 3.12% To Settle At 14.54%
6.
Weak German Data,
UST Curve Inversion Weigh on EM Risk Assets
7.
I and E Turnover Rebounds to c.$700m as CBN Re-Issues
Long Tenor OMO Bill
8.
Invest in FGN
Monthly Bond Auction – March 2019
9.
PMA Stop Rates Clear
c.40bps lower following c.530% Oversubscription
10. Access Bank Plc
Holds Signing Ceremony for N15 Billion Green Bond Issuance
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