Bonds & Fixed Income | |
Bonds & Fixed Income | |
3415 VIEWS | |
![]() |
Friday, September 21, 2018 07:12 AM / Zedcrest Capital
***Oil Prices Slip after Trump Slams OPEC on Twitter***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.23% |
As at September14,
2018,9bps up from 11.14% recorded in July 2018. |
MPR |
14.00% |
Next MPC
meeting scheduled for September 24 & 25, 2018 |
External
Reserves |
$44.94bn |
As atSeptember 19,
2018. A c.0.13% decrease from $45.00bnon Sept. 18, 2018 |
Brent Crude |
$78.31pb |
As at September20,
2018. A c.0.50% increasefrom$78.72pbon
Sept. 19, 2018 |
Bonds
The
bond market remained scantily traded, except for some client interests we
witnessed mostly on the short and mid-tenured bonds. Yields compressed
marginally by c.2bps, as the market remained relatively flat week to date.
We
expect this trend to persist in the interim, whilst market players closely
watch out for the US FOMC and Nigeria MPC meetings, and the FGN Bond auction
which would hold in the coming week. Our sentiment remains slightly bearish,
with the FOMC expected to hike rates for a third time this year; the MPC though expected to hold rates might sound
more hawkish, while we anticipate a further hike in the FGN bond auction rates,
in tune with the recent developments in the secondary market.
Secondary Market Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
15.54
13-Feb-20 |
14.43 |
13.79 |
0.03 |
14.50
15-Jul-21 |
15.17 |
15.10 |
(0.07) |
16.39
27-Jan-22 |
15.01 |
14.69 |
0.01 |
14.20
14-Mar-24 |
15.10 |
14.96 |
(0.03) |
12.50
22-Jan-26 |
15.20 |
15.08 |
(0.04) |
16.29
17-Mar-27 |
15.18 |
15.09 |
(0.02) |
13.98
23-Feb-28 |
15.24 |
15.14 |
(0.04) |
12.15
18-Jul-34 |
15.40 |
15.28 |
(0.04) |
12.40
18-Mar-36 |
15.40 |
15.30 |
0.01 |
16.2499
18-Apr-37 |
15.39 |
15.27 |
(0.01) |
Source: Zedcrest Dealing Desk
Treasury Bills
Spreads tightened across the curve as the relatively
high level of uncertainty in previous sessions ebbed, following an OMO auction
by the CBN, where the PMA bills offered in the previous session were repeated,
with demand mostly on the 364-day bill which cleared at 13.50% with a total sale
of N306.55bn.
Barring a further OMO auction by the CBN, we
expect yields to be relatively stable, due to the buoyant level of liquidity in
the system. Market players are expected to prefer the longer end now above the
short end of the curve.
OMO Auction Result |
||||
Tenor |
Rate (%) |
Offer (N’bn) |
Sub (N'bn) |
Sale (N'bn) |
91 days |
Nil |
100.00 |
0.24 |
No Sale |
182 days |
12.50 |
150.00 |
38.05 |
31.05 |
364 days |
13.50 |
300.00 |
383.39 |
306.55 |
Source: Zedcrest Research
Secondary Market Treasury
Bills
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
4-Oct-18 |
11.00 |
10.00 |
0.00 |
1-Nov-18 |
12.50 |
12.00 |
(0.55) |
6-Dec-18 |
12.65 |
12.25 |
(0.35) |
3-Jan-19 |
12.65 |
12.45 |
(0.35) |
14-Feb-19 |
13.00 |
12.75 |
(0.20) |
14-Mar-19 |
12.60 |
12.45 |
(0.45) |
4-Apr-19 |
12.65 |
12.30 |
(0.60) |
18-Jul-19 |
12.80 |
12.55 |
(0.50) |
1-Aug-19 |
13.50 |
12.60 |
(0.15) |
Source: Zedcrest Dealing Desk
Money
Market
The OBB and
OVN rates remained relatively stable, closing today at 4.17% and 4.75%
respectively, as inflows from OMO T-bill maturities (c.N218bn) helped offset outflows
from today’ OMO auction sales (c.N337bn), consequently sustaining system
liquidity at c.N560bn positive.
We expect
rates to close the week on a calm note, barring a further OMO auction by the
CBN.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
4.17 |
4.75 |
Overnight
(O/N) |
4.75 |
5.75 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USDrate remained stable
at N306.30/$ (spot) and N360.94/$ (SMIS).At the I&E FX window, a total of $401.69mn
was traded in 386deals, with rates ranging between N358.00/$ - N365.00/$. The
NAFEX closing rate depreciatedby c.0.08% to N363.27/$ from N362.97/$
previously.
At the parallel market, the cashrates depreciated
by 30k to N359.70/$, while the transfer rate remained unchanged at N362.00/$.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.30 |
306.30 |
CBN
SMIS |
360.94 |
360.94 |
I&E
FX Window |
363.27 |
362.97 |
Cash
Market |
359.70 |
359.40 |
Transfer
Market |
362.00 |
362.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereignstraded on firmly
bullish note in today’s session, following the resurgent interests across most
EM assets. Yields declined by c.13bps on
average, with the most interests seen on the Nov 2047 bond which gained a whopping
2.00 percent on the day.
The NGERIA Corps were also slightly
bullish, with interests seen on the ZENITH, UBANL and FIDBAN 22s. The top
gainer was the FIDBAN 22s which gained about 0.50pct on the day.
Related News
1. Average T-Bills Rate
Rose 184bps WoW Amidst Buoyant System Liquidity
2. Bond Yields Moderate
Further Amid Tighter Supply
3. Average T-bills
Yield Rose Significantly by 208bps to Close the Week at 14.43%
4. Markets Take a
Breather as CBN Pauses on OMO
5. Market Players
Selloff Bills above 14% as CBN extends OMO offer to the 1-year
6. Yield Curve Nears
Inversion as DMO Clears 1-Year Bill at 15.60% eff. Yield
7. Market Players Risk
off T-bills, as CBN Elongates OMO Tenor above the 300day Mark
8. Ahead of Next
T-bills Auction Scheduled for 12th Sept, 2018
9. Market Players
Demand Higher Rates for OMO, as PMA Approaches
10. CBN Raises OMO Stop
Rates, Succumbs to Investor Pressure PMA Holds this Wednesday
11. Average T-Bills
Yield Rose by 15bps to Close the Week at 12.36%