Nigerian Eurobonds Weaken as Trade war Depresses Oil Prices

Proshare

Wednesday, September 04, 2019 07:30AM / Zedcrest Capital 

 

The NGERIA Sovereigns weakened in today's session, as a decline in oil prices from the trade war escalation and possible increase in output by the OPEC+ weighed on sentiments.

 

Below are highlights of trading activities in the fixed income and forex market on September 03, 2019.

 

Bonds

The FGN Bond market traded on a relatively quiet note, with few demand interests witnessed around the mid end of the curve. Yields however ticked marginally higher by c.1bp, as traders maintained bearish bets following the weaker than expected Q2 GDP figures.

 

We expect interests in FGN bonds to remain relatively muted, due to expectations for higher yields in the T-bills market.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.56

14.10

0.00

16.39 27-Jan-22

14.63

14.18

0.05

12.75 27-Apr-23

14.64

14.42

0.02

14.20 14-Mar-24

14.35

13.97

0.00

13.53 23-Mar-25

14.38

13.82

0.00

12.50 22-Jan-26

14.43

14.12

0.02

16.29 17-Mar-27

14.23

14.15

(0.08)

13.98 23-Feb-28

14.35

14.18

0.00

12.15 18-Jul-34

14.73

14.46

0.03

12.40 18-Mar-36

14.73

14.40

0.00

16.2499 18-Apr-37

14.76

14.41

0.02

14.80 26-Apr-49

14.75

14.52

0.02


Source: Zedcrest Dealing Desk
 

 

 

Treasury Bills

Yields in the T-bills market compressed marginally by c.5bps, as a decline in funding pressures spurred some buy interests on the short end of the curve. Yields on the longer dated maturities however remained slightly pressured, with most bids now at c.14.00%.

 

We expect the market to maintain its current flattish trend, as market players anticipate a renewed OMO auction by the CBN on Thursday, when c.N204bn worth of OMO T-bills mature.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

13.25

12.50

(0.25)

3-Oct-19

13.25

12.85

0.00

14-Nov-19

13.25

12.50

(0.25)

5-Dec-19

13.60

12.50

(0.15)

2-Jan-20

13.70

13.35

(0.15)

6-Feb-20

14.00

13.50

0.10

19-Mar-20

14.00

13.35

0.00

2-Apr-20

14.00

13.50

0.05

14-May-20

14.00

13.50

0.00

04-Jun-20

14.00

13.50

0.05

02-Jul-20

14.00

13.15

0.05

13-Aug-20

13.90

13.35

(0.10)

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market remained relatively stable as system liquidity remained in positive territory at c.N145bn. The OBB and OVN rates consequently ended the session at 8.00% and 8.93% respectively.

 

We expect rates to remain stable tomorrow, as there are no significant funding pressures anticipated.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.00

8.86

Overnight (O/N)

8.93

9.86

Source: FMDQ, Zedcrest 

 

 

FX Market

At the interbank, the Naira/USD spot and SMIS rates remained stable at N306.95/$ and N358.04/$. The Naira depreciated at the I&E window by 14k to close at N362.87/$. At the parallel market, the cash and transfer rates remained stable at N357.70/$ and N362.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.04

358.04

I&E FX Window

362.87

362.73

Cash Market

357.70

357.70

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns weakened further, while the NGERIA corps were the most hit, with yields trending higher by c.11bps on average across the traded tickers. We witnessed the most selling interest on the UBANL 22s, ZENITH 22s and SEPLLN 23s

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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