Bonds & Fixed Income | |
Bonds & Fixed Income | |
3434 VIEWS | |
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Saturday, October 06, 2018 / 09: 37AM / Zedcrest Capital
***Nigeria’s oil, gas export sale rises by 36%***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.23% |
As at September14,
2018,9bps up from 11.14% recorded in July 2018. |
MPR |
14.00% |
Left Unchanged
for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting |
External
Reserves |
$43.92bn |
As atOctober4,
2018. A c.0.11% decrease from $43.97bnon October3, 2018 |
Brent Crude |
$84.67pb |
As at October 5,
2018. A c.1.36% decreasefrom$85.84pbon
October 4, 2018 |
Bonds
The
bullish sentiments in the bond market persisted in today’s session, with yields
moderating further by c.6bps following some break in support on the 2027 and
2037 bond which traded as low as 14.95% on each. We also witnessed interests on
the 2022 bond, whilst there were slight retracements upward on the 2020 bond.
As sentiments around an expected Q4 Eurobond Launch ($2.8bn/N850bn) continues to filter into the market, we expect the market to remain slightly bullish in the near term. We are however cautious in anticipation of the Q4 FGN Bond Calendar, which we still expect to be relatively higher, in tune with the deficit levels for the 2018 budget (N1.95trn).
Benchmark FGN
Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
15.54 13-Feb-20 |
13.77 |
13.44 |
0.12 |
14.50 15-Jul-21 |
14.74 |
14.02 |
(0.14) |
16.39 27-Jan-22 |
14.03 |
13.60 |
(0.38) |
14.20 14-Mar-24 |
14.95 |
14.77 |
(0.01) |
12.50 22-Jan-26 |
14.80 |
14.65 |
0.00 |
16.29 17-Mar-27 |
15.06 |
14.94 |
(0.03) |
13.98 23-Feb-28 |
15.10 |
15.03 |
(0.04) |
12.15 18-Jul-34 |
15.17 |
15.08 |
0.00 |
12.40 18-Mar-36 |
15.09 |
15.01 |
(0.11) |
16.2499 18-Apr-37 |
15.02 |
14.81 |
(0.03) |
Source: Zedcrest Dealing Desk
Treasury Bills
Opening next week, we expect yields to remain elevated due to expectations for further debits for a wholesale SMIS acution by the CBN on Monday.
Benchmark FGN Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
1-Nov-18 |
13.00 |
12.75 |
0.25 |
6-Dec-18 |
13.00 |
12.75 |
0.25 |
3-Jan-19 |
12.75 |
12.30 |
0.00 |
14-Feb-19 |
12.90 |
12.50 |
0.15 |
14-Mar-19 |
12.70 |
12.25 |
0.00 |
4-Apr-19 |
12.50 |
12.20 |
0.00 |
18-Jul-19 |
13.00 |
12.45 |
0.00 |
1-Aug-19 |
13.00 |
12.50 |
0.00 |
12-Sep-19 |
13.25 |
12.75 |
0.00 |
Source: Zedcrest Dealing Desk
Money
Market
The OBB and
OVN rates shot significantly higher by c.10pct to 20.86% and 22.50%
respectively, following a significant squeeze in system liquidity from the OMO
auctions in the previous session. System liquidity published by the CBN opening
today, fell below analysts expectation at c.76bn, consequently driving the
funding rates significantly higher.
We expect
rates to remain elevated due to expected outflows for a wholesale SMIS by the
CBN on Monday, which is likely to wipe off the existing system liquidity from
its current positive levels.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
20.86 |
11.67 |
Overnight
(O/N) |
22.50 |
12.58 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
stable N360.40/$ (spot) and N361.34/$ (SMIS). At the I&E FX window a total
of $62.54mn was traded in 258 deals, with rates ranging between N345.00/$ -
N365.00/$. The NAFEX closing rate depreciated by c.0.07% to N363.82/$ from
N363.57/$ previously.
At the parallel market, the cash rate remained
stable at N359.50/$, while the transfer rate appreciated by 20k to N362.80/$.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.40 |
306.40 |
CBN
SMIS |
361.34 |
361.34 |
I&E
FX Window |
363.82 |
363.57 |
Cash
Market |
359.50 |
359.50 |
Transfer
Market |
362.80 |
363.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA sovereigns remained bearish in
today’s session, with yields trending higher by c.5bps on average, amid a
continued rise in US treasuries following a better than expected unemployment
report. The most losses were still on the 30-yr which lost c.0.90pct on the
day.
The NGERIA Corps were mostly quiet, except
for slight interests witnessed on the ACCESS 21s Snr and Subs, which gained
about 0.15pct and 0.25pct on the day respectively.
1. Seplat Eurobond Surges amid Uptrend in Oil Prices
2. Bond Yields Compress Further as Traders Pull Back on Offers
3. October 2018 FGN Savings Bond Offer for Subscription
4. T- Bills Market Reverses Bullish Run as PMA Holds Tomorrow
5. Money Market Rate Increased as Overnight Rate Rose to 7.17%
6. Bond Yields Test Key Support in Month End Rally
7. Bond Yields Compress, as Investors Rally the Long End
8. September 2018 FGN Bond Auction Oversubscribed
9. DMO Gets Robust Auction Demand, Raises More than the N90bn Offered at 1.64X Bid to Cover
10. Funding Rates Spike As CBN Reverses Paris Club Credits