Bonds & Fixed Income | |
Bonds & Fixed Income | |
3571 VIEWS | |
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Thursday, November 07, 2017/7.30PM/Zedcrest Capital
KEY INDICATORS
Inflation | 15.91% | Declined by 0.07% in October from 15.98% in September 2017 |
MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting of November 2017 |
External Reserves | $38.20billion | Accreted 9.71% as at 5thDecember from $34.82bn on 29thNovember 2017 |
Brent Crude | $61.87pb | Remained stable at previous day price of $61.87pb - 6th December 2017 |
Bonds
The Bond market maintained its bullish run in today’s session with sustained demand witnessed especially on the 5-, 10- and 20-yr bonds. This was as market players continued to speculate a further decline in the sovereign yield curve, owing to the discontinuance of OMO T-bill issuance by the CBN. Average bond yields consequently declined by a further 6bps to close today at 14.45%. We expect this trend to persist, but at a slower pace, as market players are expected to trade cautiously in anticipation of the bond auction next week.
Table 1: Benchmark FGN Bond Yields | |||
Description | Bid (%) | Offer (%) | Day Change (%) |
16.00 29-Jun-19 | 14.49 | 14.42 | (0.05) |
15.54 13-Feb-20 | 14.40 | 14.33 | (0.09) |
14.50 15-Jul-21 | 14.61 | 14.54 | (0.09) |
16.39 27-Jan-22 | 14.35 | 14.28 | 0.08 |
14.20 14-Mar-24 | 14.60 | 14.53 | (0.03) |
12.50 22-Jan-26 | 14.55 | 14.48 | (0.09) |
16.29 17-Mar-27 | 14.61 | 14.54 | (0.11) |
12.15 18-Jul-34 | 14.31 | 14.24 | (0.07) |
12.40 18-Mar-36 | 14.31 | 14.24 | (0.01) |
16.25 18-Apr-37 | 14.28 | 14.21 | (0.12) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained aggressively bullish in today’s session, with rates on most of the medium and long tenured maturities trading below 16% and 15% respectively. Market volumes were however lower than in the previous session as most market players preferred to hold on to their long positions due to the significant decline in supply of T-bills to the market. Average T-bill yields consequently declined by 25bps to close today at 16.56%. We expect the market to be scantily traded tomorrow, but with a sustained decline in yields as market players continue to trade on the “NO OMO” trend.
Table 2: Benchmark Treasury Bills Rates | |||
Description | Bid (%) | Offer (%) | Day Change (%) |
4-Jan-18 | 16.00 | 15.75 | 0.00 |
1-Feb-18 | 16.00 | 15.75 | (0.50) |
1-Mar-18 | 14.00 | 13.75 | 0.00 |
5-Apr-18 | 15.45 | 15.20 | (0.15) |
3-May-18 | 15.65 | 15.40 | (0.60) |
14-Jun-18 | 15.50 | 15.25 | (0.25) |
5-Jul-18 | 15.60 | 15.35 | (0.20) |
2-Aug-18 | 15.50 | 15.25 | 0.00 |
20-Sep-18 | 14.85 | 14.60 | (0.15) |
4-Oct-18 | 14.75 | 14.50 | (0.25) |
1-Nov-18 | 14.25 | 14.00 | (0.75) |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates crashed by 750bps to 6.33% and 7.33% due to c.N110bn OMO maturity inflows which improved system liquidity to c.N100bn long, from a negative opening figure of c.N10bn. We expect rates to remain stable at single digit levels tomorrow, barring any significant OMO T-bill or FX intervention by the CBN.
Table 3: Money Market Rates | ||
| Current (%) | Previous (%) |
Open Buy Back (OBB) | 6.33 | 13.83 |
Overnight (O/N) | 7.33 | 14.83 |
Source: FMDQ, Zedcrest Research
FX Market
The CBN Official spot rate appreciated marginally by 0.02% to N306.45/$ from N306.50/$ recorded in the previous session. Rates at the Investors and exporters FX window closed at N360.31/$ from N360.93/$ in the previous session. Rates at the parallel market also appreciated slightly to close at N361.40/$.
Table 4: FX Rates | ||
| Current (N/$) | Previous ( N/$) |
CBN Spot | 306.45 | 306.50 |
CBN SMIS | 330.00 | 330.00 |
I&E FX Window | 360.31 | 360.93 |
Parallel Market | 361.40 | 361.50 |
Source: CBN, FMDQ, REXEL BDC
For more details email research@zedcrestcapital.com or call the dealing desk via 01-6311667
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