| Bonds & Fixed Income |    3736 VIEWS  |
| Bonds & Fixed Income | |
| 3736 VIEWS | |
 |
Tuesday, December 11, 2018/ 05:24PM / Zedcrest Capital
***Nigeria's credit profile constrained by exposure to shocks*** - Moody’s
KEY INDICATORS
|
Indicator |
Value |
Commentary |
|
Inflation |
11.26% |
As at November 21, 2018. A c.2bps
down from 11.28% recorded in September 2018 |
|
MPR |
14.00% |
Left Unchanged for the 12th
Consecutive Time at the Nov. 22, 2018 MPC Meeting |
|
External Reserves |
$42.60bn |
As at December 7, 2018. A c.0.26%
increase from $42.49bn on December 5, 2018 |
|
Brent Crude |
$60.90pb |
As at December 11, 2018. A c.0.31% increase from $60.71pb
on December 10, 2018 |
Bonds
Yields
in the bond market trended higher by c.5bps in today’s session, with slight
sell off mostly on the 2022 and 2024 bonds. Continued OMO interventions by the
CBN has continued to weigh on yields on the short end of the curve, and we
expect this trend to persist in the near term.
|
Benchmark FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
15.54 13-Feb-20 |
15.28 |
14.95 |
0.00 |
|
14.50 15-Jul-21 |
15.77 |
15.50 |
0.08 |
|
16.39 27-Jan-22 |
15.21 |
14.92 |
0.20 |
|
14.20 14-Mar-24 |
15.32 |
15.23 |
0.15 |
|
12.50 22-Jan-26 |
15.86 |
15.78 |
0.02 |
|
16.29 17-Mar-27 |
15.79 |
15.69 |
0.01 |
|
13.98 23-Feb-28 |
15.98 |
15.87 |
0.01 |
|
12.15 18-Jul-34 |
15.75 |
15.59 |
0.00 |
|
12.40 18-Mar-36 |
15.76 |
15.69 |
0.00 |
|
16.2499
18-Apr-37 |
15.64 |
15.50 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained bearish
with yields trending higher by c.8bps on average, as market players sold off on
some short tenured bills (Dec/Jan) in the wake of a continued OMO intervention
by the CBN which further compressed system liquidity further to an estimated
net negative position. Of the N100bn T-bills offered by the CBN, market players
only bidded for c.N39bn of the 177-day and 268-day bills offered, which were
sold at 13.50% and 15.00% respectively.
We expect rates to remain elevated
with expectations for continued OMO intervention by the CBN.
|
|
|||
|
Description |
Bid
(%) |
Offer
(%) |
Day
Change (%) |
|
3-Jan-19 |
16.00 |
14.00 |
1.25 |
|
14-Feb-19 |
14.90 |
14.25 |
0.10 |
|
14-Mar-19 |
14.25 |
13.50 |
(0.05) |
|
4-Apr-19 |
14.50 |
13.50 |
0.00 |
|
2-May-19 |
13.15 |
12.90 |
0.00 |
|
18-Jul-19 |
14.00 |
12.75 |
0.00 |
|
1-Aug-19 |
15.00 |
14.50 |
0.00 |
|
12-Sep-19 |
15.00 |
14.90 |
(0.25) |
|
3-Oct-19 |
15.10 |
14.60 |
0.00 |
|
14-Nov-19 |
15.00 |
14.75 |
(0.05) |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market trended c.30bps
higher and are now at a 7-month high, with the OBB and OVN rates closing at
65.00% and 70.92%, as the CBN maintained its mop up of system liquidity via a
further OMO sale (c.N39bn), which has now pushed system liquidity to a net
negative positon of c.N45bn est. as at COB today.
We expect rates to remain elevated, with
the CBN expected to maintain its spate of OMO interventions in the market.
|
Money
Market Rates |
||
|
|
Current
(%) |
Previous
(%) |
|
Open Buy Back (OBB) |
65.00 |
39.17 |
|
Overnight (O/N) |
70.92 |
41.58 |
Source: FMDQ, Zedcrest Research
FX Market
At
the Interbank, the Naira/USD rate remained stable at N306.90/$ (spot) and
N359.81/$ (SMIS). At the I&E FX window, the NAFEX closing rate depreciated
by c.0.05% to close at N365.21/$ from N365.03/$ previously.
At
the parallel market, the cash rate depreciated by 40k to N363.40/$, while the
transfer rate remained unchanged at N368.00/$.
|
FX
Market |
||
|
|
Current
(N/$) |
Previous
( N/$) |
|
CBN Spot |
306.90 |
306.90 |
|
CBN SMIS |
359.16 |
359.16 |
|
I&E FX Window |
365.21 |
365.03 |
|
Cash Market |
363.40 |
363.00 |
|
Transfer Market |
368.00 |
368.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA
Sovereigns were slightly weaker on the day, with yields trending higher by
c.3bps due to slight sell on short end of the curve.
The NGERIA Corps
were relatively muted, except for slight sell on the DIAMBK 19s (+8bps) and continued
interests seen on the ACCESS 21s Snr.
Related News
1. Money Market
Rates hit Five Month High as CBN Maintains OMO Interventions
2. Sukuk Offer Opens at 15.743%; Average T-Bills Rate
Advanced 73bps to 14.4% Sustaining Bearish Run
3. Average Money Market Rate Rose to 8.24% to Settle at
25.21%
4. Could The US Market Rally Signal A Coming Recession?
5. Tight System Liquidity Pushes Funding Rates to a One Month
High
6. The CBN Conducts a Special OMO Auction In Anticipation Of
More Fiscal Spending
7. Fixed Income Market Maintains Bearish Posture As The CBN
Carries On With OMO Auctions
8. The CBN Accelerates Its Liquidity Mop Up Exercise With A
Fourth Consecutive OMO Auction
9. Yields Continue to Rise as CBN Maintains Rates at 3rd Consecutive OMO Auction
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