Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Thursday, April 04, 2019 07:25 PM /Zedcrest Capital
***DMO to
Issue 30-Year Naira Bonds This Quarter *** - Oniha
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 |
$44.68bn |
As at April 3, 2019. A c.0.09% increase
from $44.65bn on April 2, 2019 |
Brent Crude |
$69.97pb |
As at April 4, 2019. A c.0.94% increase from $69.32pb
on April 3, 2019 |
Bonds
The
FGN Bond market turned significantly bearish in today’s session, with yields
trending higher by c.23bps on the day and consequently breaking above the
14.50% resistance point to close at an average of 14.68% on the bid. The most
selloff remained on the 2028s which traded at a high of 14.65%.
The
bearish sentiments could be largely linked to relatively weak demand interests
and the news on the issuance of a new 30-year bond this quarter by the DMO.
We expect yields to remain slightly pressured, but with some bargain hunting expected at current levels.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.87 |
14.31 |
0.14 |
16.39 27-Jan-22 |
14.55 |
14.03 |
0.28 |
12.75 27-Apr-23 |
14.76 |
14.14 |
0.42 |
14.20 14-Mar-24 |
14.51 |
14.16 |
0.17 |
13.53 23-Mar-25 |
14.82 |
14.42 |
0.27 |
12.50 22-Jan-26 |
14.79 |
14.50 |
0.17 |
16.29 17-Mar-27 |
14.70 |
14.53 |
0.25 |
13.98 23-Feb-28 |
14.77 |
14.62 |
0.19 |
12.15 18-Jul-34 |
14.62 |
14.47 |
0.19 |
12.40 18-Mar-36 |
14.59 |
14.47 |
0.24 |
16.2499 18-Apr-37 |
14.50 |
14.30 |
0.17 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market
We expect yields to remain elevated in the secondary
market, owing to the relatively tight system liquidity level from the significant
OMO sale today and the anticipated retail FX funding for tomorrow.
Benchmark Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
4-Apr-19 |
9.90 |
9.65 |
(0.60) |
2-May-19 |
12.25 |
11.80 |
0.00 |
13-Jun-19 |
12.00 |
11.50 |
0.00 |
18-Jul-19 |
12.25 |
12.00 |
0.00 |
1-Aug-19 |
13.15 |
12.90 |
0.05 |
12-Sep-19 |
13.10 |
13.00 |
0.05 |
3-Oct-19 |
13.15 |
13.05 |
(0.10) |
14-Nov-19 |
13.20 |
12.95 |
0.10 |
5-Dec-19 |
13.25 |
13.00 |
0.15 |
2-Jan-20 |
13.10 |
12.95 |
0.00 |
6-Feb-20 |
9.90 |
9.65 |
(0.60) |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market rose higher by c.3pct, as the CBN drained system liquidity
via a significant OMO sale today. The OBB and OVN rates consequently ended the
session at 19.71% and 20.86% respectively.
We
expect rates to remain elevated tomorrow, as banks provide funding for the
CBN’s bi-weekly retail FX auction.
Money
Market Rates |
||
|
Current
(%) |
Previous
(%) |
Open
Buy Back (OBB) |
19.71 |
16.71 |
Overnight
(O/N) |
20.86 |
17.50 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate was
unchanged at N307.00/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in
the I&E window however appreciated by 0.07% to N360.30/$, whilst market
turnover remained slightly lower at $119m. At the parallel market, the cash rate
appreciated by 0.03% to N358.60/$ whilst the transfer rate remained unchanged at
N364.00/$.
FX
Market |
||
|
Current
(N/$) |
Previous
( N/$) |
CBN
Spot |
307.00 |
307.00 |
CBN
SMIS |
355.78 |
355.78 |
I&E
FX Window |
360.30 |
360.55 |
Cash
Market |
358.60 |
358.70 |
Transfer
Market |
364.00 |
364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns were slightly bearish, with yields marginally
higher by c.4bps on the day, on the back of some more profit taking, especially
on the long end of the curve.
In the NGERIA Corps, Investors remained slightly bullish on the 2022
maturities.
Related News
1. SFS Eurobonds
Quote - 020419
2. Bond Yields Trend Higher Following Sell off on the 10-Year
3. Funding Rates Spike as CBN Resumes OMO with c.N325bn Sale
4. Money Market Rates Compress Further As CBN Stays Mute on
OMO
5. Access Bank Lists Pioneer N15bn Nigerian Green Bond At
FMDQ OTC
6. Average Money Market Rate Fell By 4.28% To Settle At
10.27%
7. United Capital Shares Insights as Lead Issuing House of
NSP Green Bond
8. April 2019 FGN Savings Bonds Offer For Subscription
9. Funding Rates Close Stable as FAAC Inflows Bolster System
Liquidity
10. Bond Market
Trades Flat, Despite Significant Cut in Auction Rates
11. Summary of March 2019 FGN Bond Auction Results