Bonds & Fixed Income | |
Bonds & Fixed Income | |
3779 VIEWS | |
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Monday, January 21, 2018/ 07:48PM / Zedcrest Capital
***IMF Lowers Nigeria’s 2019 Growth Projection to 2%***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.44% |
As at January 16, 2019. A c.16bps increase from 11.28% recorded
in November 2018 |
MPR |
14.00% |
MPC Meeting to be held on the 21st and 22nd of January 2019 |
External Reserves |
$43.11bn |
As at January 18, 2019. A c.0.01% decrease from $43.10bn on January
17, 2019 |
Brent Crude |
$62.48pb |
As at January 21, 2019. A c.0.32% decrease from $62.68pb on January 18, 2018 |
Bonds
The Bond market remained slightly bearish opening the week, with
yields expanding by c.7bps on average following slight selloff on the 20s and
27s. We also noticed slightly improved offers on the short and mid tenors.
We expect this trend to persist, as market players anticipate
release of the Q1 FGN Bond Calendar by the DMO. We also expect the CBN to
reiterate its hawkish monetary stance at its MPC meeting scheduled for
tomorrow, where the MPR is expected to be held at 14% alongside other monetary
parameters.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
15.51 |
15.14 |
0.42 |
14.50 15-Jul-21 |
15.40 |
15.24 |
0.08 |
16.39 27-Jan-22 |
15.09 |
14.90 |
0.04 |
14.20 14-Mar-24 |
15.21 |
15.04 |
0.06 |
12.50 22-Jan-26 |
15.36 |
15.14 |
(0.05) |
16.29 17-Mar-27 |
15.18 |
15.06 |
0.11 |
13.98 23-Feb-28 |
15.40 |
15.21 |
(0.01) |
12.15 18-Jul-34 |
15.30 |
15.10 |
0.06 |
12.40 18-Mar-36 |
15.10 |
14.99 |
(0.07) |
16.2499 18-Apr-37 |
15.21 |
14.96 |
0.02 |
Source: Zedcrest Dealing
Desk
Treasury
Bills
The
T-bills market remained slightly bullish despite the significant squeeze in
system liquidity via an OMO (c.N180bn) and wholesale FX intervention (c.$210m)
by the CBN. The c.10bps decline in yields is largely attributed to offshore interests
mostly around the short tenors (Feb/Mar), with some demand also seen on the Sep
– Dec maturities.
Despite
the resurgent interests from offshore investors as evidenced in the increased
volumes in the I&E FX market, we expect T-bill yields to remain slightly
elevated, due to the regular OMO interventions by the CBN.
|
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
14-Feb-19 |
14.05 |
13.50 |
0.00 |
14-Mar-19 |
14.05 |
12.00 |
0.00 |
4-Apr-19 |
14.05 |
13.40 |
0.00 |
2-May-19 |
12.90 |
12.50 |
(0.10) |
13-Jun-19 |
13.30 |
13.00 |
0.10 |
18-Jul-19 |
13.50 |
13.30 |
0.30 |
1-Aug-19 |
13.75 |
13.55 |
(0.75) |
12-Sep-19 |
14.90 |
14.25 |
0.00 |
3-Oct-19 |
14.90 |
14.50 |
(0.10) |
14-Nov-19 |
14.70 |
14.45 |
(0.15) |
5-Dec-19 |
14.90 |
14.65 |
0.00 |
Source: Zedcrest Dealing Desk
Money
Market
Rates in the
money market trended significantly higher by c.10pct, due to the OMO and FX
interventions by the CBN which is estimated to have compressed system liquidity
to c.N100bn Negative from a positive opening level of c.N270bn. The OBB and OVN
rates consequently closed the day at 25.33% and 27.17% respectively.
We expect
funding rates to moderate slightly tomorrow, as banks would be able to access
the CBN’s SLF window to fund their obligations.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
25.33 |
15.33 |
Overnight (O/N) |
27.17 |
16.17 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira
appreciated marginally by c.0.02% to N306.80/$ at the spot market, while the
SMIS rate remained unchanged at N357.97/$. The NAFEX rate in the I&E window
also appreciated marginally by c.0.09% to N362.49/$, while total traded volumes
moderated by c.7.46% to c.$375m. At the
parallel market the cash and transfer rates remained unchanged at N361.00/$ and
N365.00/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.80 |
306.85 |
CBN SMIS |
357.97 |
357.97 |
I&E FX Window |
362.46 |
362.79 |
Cash Market |
361.00 |
361.00 |
Transfer Market |
365.00 |
365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns maintained a slightly
bullish posture, with yields compressing further by c.7bps, despite the lighter
traded volumes on the back of the US MLK holiday.
The NGERIA Corps were also relatively
quiet, with no significant changes in yields on the day.
Related News
1. Money Market
Rate Decreased As Overnight Rate Fell To 16.17%
2. Bond Yields Retrace Slightly, as Demand Pressures Wane
3. Access Bank Seeks Regulatory Approval In Respect Of A
Proposed N15bn Green Bonds Issuance
4. Bond Yields Break Key Support as Offshore Inflows Push I
and E Rate to 4-Month Low
5. Mixta Real Estate Plc: Listing of N2,961,000,000
Guaranteed and N2,320,000,000 Secured Bonds
6. Weak Demand Sends 1yr PMA Rate 50bps Higher
7. NSE Lists N32,899,000,000 Series II, 7 year 16.25% Fixed
Rate Unsecured Bonds of Sterling Investment
8. Bond Yields Test Key Support as Offshore Inflows Bolster
NAFEX Rate
9. Treasury Bill Auction Schedule For January 16th, 2019
10. Bond Yields Compress Further as Coupon Expectations
Sustain Buying Interests
11. T-Bills Market Records Bullish Performance As Average
Yields Decline to 15.3%
12. Money Market Rate Decreased As Overnight Rate Fell to
22.50%