Bonds & Fixed Income | |
Bonds & Fixed Income | |
3868 VIEWS | |
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Thursday, March 14, 2019 06:49 AM / Zedcrest Capital
***Nigeria,
India to expand $12bn investment***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.37% |
As at February 15, 2019. A c.7bps decline
from 11.44% recorded in December 2018 |
MPR |
14.00% |
Left Unchanged for the 15th
Consecutive Time at the Jan. 22, 2019 MPC Meeting |
External Reserves |
$42.87bn |
As at March 12, 2019. A c.0.12% increase
from $42.82bn on March 11, 2019 |
Brent Crude |
$67.83pb |
As at March 14, 2019. A c.0.74% increase from $67.33pb
on March 13, 2019 |
Bonds
The
FGN Bond Market traded with mixed sentiments, with slight sell on the 2023s and
2027s towards the close of trading pushing yields marginally higher by c.5bps
on the day. Demand however remained relatively firm on the 2028 bond.
We expect yields to remain relatively stable, with declining T-bill yields expected to support demand interests in the near term.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.65 |
14.26 |
0.00 |
16.39 27-Jan-22 |
14.61 |
14.31 |
0.02 |
12.75 27-Apr-23 |
14.67 |
14.43 |
0.23 |
14.20 14-Mar-24 |
14.46 |
13.94 |
0.04 |
13.53 23-Mar-25 |
14.71 |
14.31 |
0.14 |
12.50 22-Jan-26 |
14.40 |
14.26 |
(0.04) |
16.29 17-Mar-27 |
14.45 |
14.27 |
0.09 |
13.98 23-Feb-28 |
14.31 |
14.33 |
(0.02) |
12.15 18-Jul-34 |
14.34 |
14.11 |
0.09 |
12.40 18-Mar-36 |
14.26 |
14.13 |
0.01 |
16.2499 18-Apr-37 |
14.20 |
14.09 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained bullish on the back of the
signifcant downtrend in rates at the previous day’s NTB auction. Buying interests
were mostly focused on the long end of the curve which remained absent at the
OMO auction conducted by the CBN today.
Of the c.N213bn OMO bills that matured today, the CBN
sold a total of c.N400bn 91 and 175-day bills in a bid to mop up the excess
liquidity in the system. Due to the oversubcription at the auction compared to
the N350bn offered, the CBN cut the OMO stop rates further by c.6bps on the
91-day to 11.84% and by c.24bps on the 175-day to 13.20%.
We expect rates to remain relatively stable, with
market players expected to sustain demand amid a further decline in the OMO
clearing rates. We however expect slight selloff on the shortend of the curve,
as market players fund for the CBN’s bi-mothly retail FX auction tomorrow.
OMO Auction
Result |
||||
Tenor |
Rate (%) |
Offer (N’bn) |
Sub (N'bn) |
Sale (N'bn) |
91 day |
11.84 |
50.00 |
62.05 |
50.75 |
175 day |
13.20 |
300.00 |
367.45 |
349.73 |
Source: CBN
Benchmark Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
4-Apr-19 |
12.50 |
9.00 |
0.00 |
2-May-19 |
11.50 |
10.00 |
0.00 |
13-Jun-19 |
12.00 |
11.00 |
0.40 |
18-Jul-19 |
12.70 |
11.95 |
0.00 |
1-Aug-19 |
12.10 |
11.85 |
(0.10) |
12-Sep-19 |
13.20 |
12.95 |
(0.10) |
3-Oct-19 |
13.40 |
13.10 |
0.05 |
14-Nov-19 |
13.15 |
13.05 |
(0.25) |
5-Dec-19 |
13.15 |
13.00 |
(0.20) |
2-Jan-20 |
12.90 |
12.75 |
(0.10) |
6-Feb-20 |
12.80 |
12.65 |
(0.15) |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market inched slightly higher by c.2pct on the back of the
significant OMO sale by the CBN which compressed system liquidity to c.N160bn
from c.N300bn opening the day. The OBB and OVN rates consequently ended the
session at 10.67% and 11.58% respectively.
We
expect rates to trend higher tomorrow, as banks fund for a retail FX auction by
the CBN.
Money
Market Rates |
||
|
Current
(%) |
Previous
(%) |
Open
Buy Back (OBB) |
10.67 |
9.42 |
Overnight
(O/N) |
11.58 |
10.00 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
unchanged at N306.95/$ (Spot) and N356.92/$ (SMIS). The NAFEX closing rate in
the I&E window however weakened slightly by 0.02% to N360.36/$. At the
parallel market, the cash rate remained unchanged at N358.00/$, while the
transfer rate strengthened by 0.27% to N364.00/$.
FX
Market |
||
|
Current
(N/$) |
Previous
( N/$) |
CBN
Spot |
306.95 |
306.95 |
CBN
SMIS |
356.92 |
356.92 |
I&E
FX Window |
360.36 |
360.29 |
Cash
Market |
358.00 |
358.00 |
Transfer
Market |
364.00 |
365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns turned bullish in today’s session following
sustained gains in oil prices. Yields were consequently lower by c.3bps, with
the most demand witnessed on the 2038s.
The NGERIA Corps were relatively quiet except for slight interests
witnessed on the ACCESS and FBNNL 21s.
Related News
1.
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Sees Significant Drop in T-bills Yields at The PMA
2.
One Year T-bill to Clear Significantly Lower at PMA
Tomorrow
3.
Nigerian Eurobonds Turn Bullish as Oil Prices Move Higher
4.
Increased OMO Mop-Ups by CBN Drive T-Bills Average Yield
up to 13.5% as PMA Holds this Wednesday
5.
Money Market Rate Decreased As Overnight Rate Fell To
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6.
Monthly Fixed Income Review For February 2019
7.
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8.
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To Take Center Stage
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Bond Yields Tick Higher as Demand Interests Wane
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Trading