| Bonds & Fixed Income |    4708 VIEWS  |
| Bonds & Fixed Income | |
| 4708 VIEWS | |
 |
Wednesday, June 13, 2018 07:59PM / Zedcrest Capital
*** Nigeria’s inflation slows for 16th straight month to 11.61% in May*** - NBS
*** Buhari to sign 2018 Budget Next week*** - Adesina
*** US Fed Hikes rates by 0.25%***
KEY INDICATORS
|
Inflation |
11.61% |
Declined by 0.87% in May from 12.48% in April 2018 |
|
MPR |
14.00% |
Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018 |
|
External Reserves |
$47.42billion |
Fell by 0.02% as at 7 June from $47.43bn as at 6 June 2018 |
|
Brent Crude |
$76.42pb |
Fell by 0.04% from $76.47pb on 11 June 2018 |
Bonds
The Bond market remained relatively stable with yields compressing slightly by c.2bps, following some client demand on the short to medium end of the curve. This came as market players anticipated a further decline in the May inflation result which trended lower by 87bps M/M to 11.61%. We expect yields to remain relatively stable at these levels with some sell pressure still witnessed on the longer end of the curve in recent sessions. We also note that offshores are still net sellers of FGN bonds in anticipation of a further hike in the US Fed fund rates which is expected to further dampen sentiments in the EM space.
|
FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
16.00 29-Jun-19 |
11.95 |
11.54 |
(0.04) |
|
15.54 13-Feb-20 |
12.84 |
12.31 |
0.08 |
|
14.50 15-Jul-21 |
13.37 |
13.27 |
(0.06) |
|
16.39 27-Jan-22 |
13.16 |
13.06 |
(0.11) |
|
14.20 14-Mar-24 |
13.25 |
13.08 |
(0.03) |
|
12.50 22-Jan-26 |
13.48 |
13.38 |
(0.05) |
|
16.29 17-Mar-27 |
13.32 |
13.29 |
(0.04) |
|
12.15 18-Jul-34 |
13.32 |
13.29 |
(0.04) |
|
12.40 18-Mar-36 |
13.67 |
13.57 |
0.08 |
|
16.25 18-Apr-37 |
13.60 |
13.53 |
(0.02) |
Treasury Bills
The T-bills market remained relatively flat, with yields compressing slightly by c.2bps. The PMA conducted by the CBN was moderately subscribed at an average of 1.38X bid to cover. Rates however cleared slightly higher at 10.20, 10.50 and 11.50 on the 91, 182 and 364-day respectively due to the increased volumes on offer. We expect yields to tick slightly higher tomorrow, as the CBN is expected to intervene via an OMO T-bill auction to mop up excess liquidity from expected OMO maturities.
|
Treasury Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14-Jun-18 |
13.00 |
12.00 |
0.00 |
|
5-Jul-18 |
12.20 |
11.95 |
(0.05) |
|
2-Aug-18 |
12.00 |
10.75 |
0.50 |
|
13-Sep-18 |
12.25 |
12.00 |
(0.05) |
|
4-Oct-18 |
12.20 |
12.00 |
(0.05) |
|
1-Nov-18 |
12.25 |
12.05 |
(0.05) |
|
6-Dec-18 |
12.25 |
12.10 |
(0.10) |
|
3-Jan-19 |
12.20 |
11.95 |
(0.15) |
|
14-Feb-19 |
12.25 |
11.75 |
(0.10) |
|
14-Mar-19 |
12.25 |
10.40 |
(0.10) |
|
4-Apr-19 |
13.00 |
12.00 |
0.00 |
Source: Zedcrest Dealing Desk
|
NTB PMA Result |
||||
|
Tenor |
Rate (%) |
Offer (N'bn) |
Sub (N'bn) |
Sale (N'bn) |
|
91 days |
10.20 |
6.22 |
6.22 |
6.22 |
|
182 days |
10.50 |
50.00 |
53.00 |
50.00 |
|
364 days |
11.50 |
124.64 |
191.67 |
124.64 |
The OBB and OVN rates remained relatively unchanged at 15.17% and 15.67% respectively, as system liquidity declined slightly to c.N130bn long. We expect rates to decline slightly tomorrow, due to expected inflows from c.N244bn OMO T-bill maturities. This should however be moderated by an expected OMO auction sale by the CBN.
|
Money Market Rates |
||
|
|
Current (%) |
Previous (%) |
|
Open Buy Back (OBB) |
15.17 |
15.17 |
|
Overnight (O/N) |
15.67 |
16.50 |
FX Market
The Interbank rate remained stable at its previous rate of N305.90/$. The I&E FX rate appreciated slightly by 0.06% to N361.10/$. In the parallel market, cash rates depreciated further by 80k to N360.70/$, while the transfer market rate remained stable at N364.00/$.
|
FX Market |
||
|
|
Current (N/$) |
Previous ( N/$) |
|
CBN Spot |
305.90 |
305.90 |
|
CBN SMIS |
330.00 |
330.00 |
|
I&E FX Window |
361.10 |
361.30 |
|
Cash Market |
360.70 |
361.50 |
|
Transfer Market |
364.00 |
364.00 |
Eurobonds:
The NGERIA Sovereigns remained significantly bearish, as investors continued selling off across the curve ahead of the much anticipated hike in the Fed funds rate. Yields consequently rose further by c.10bps on average, with the most selloff seen on the 2032s which was down by as much as 1pt.
The NGERIA Corps also remained bearish across all traced tickers, with the most selloff witnessed on the Access 21s Snr and FIBAN 22s which fell by as much as -0.65pt (+21bps). Investors also sold off on the UBANL 22s (-0.50pt), and Access 21s Sub (-0.50pt).
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10. Naira Appreciates to a 2-yr high of N360.50 per dollar in the Parallel Cash Market
11. Position for Choppier Waters – Shorten Up!
12. Bond Yields to Remain Weak amid Expectations for Increased FGN Borrowings
13. Parallel Market Rates to Appreciate Further as CBN approves Dollar Sale to BDCs
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15. Banks Show Preference for Liquidity with Lower OMO Subscriptions
16. CBN sells c.N560bn T-bills to Moderate Excess Inflows from OMO T-bill Maturities
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