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T-Bills Yields Tick Higher as CBN Resumes OMO Sale

Bonds & Fixed Income	5857 VIEWS
Bonds & Fixed Income
5857 VIEWS

Wednesday, January 09, 2018/ 07:30AM / Zedcrest Capital

***Minimum Wage: FG, Labour agree on Jan. 23 for transmission of bill***

KEY INDICATORS

Indicator	Value	Commentary
Inflation	11.28%	As at December 14, 2018. A c.2bps increase from 11.26% recorded in October 2018
MPR	14.00%	Left Unchanged for the 12^th Consecutive Time at the Nov. 22, 2018 MPC Meeting
External Reserves	$43.04bn	As at January 7, 2018. A c.0.05% decrease from $43.06bn on January 3, 2018
Brent Crude	$58.49pb	As at January 8, 2019. A c.0.74% increase from $58.06pb on January 7, 2018

Bonds

The Bond market remained scantily traded, with slight interests around the short and mid tenors compressing yields further by c.4bps on average.

We expect yields to remain pressured lower in the near term as demand interests currently outweigh supply of bonds in the market. We however expect yields to resume an uptrend towards the monthly bond auction by the DMO.

Benchmark FGN Bonds
Description	Bid (%)	Offer (%)	Day Change (%)
15.54 13-Feb-20	14.98	14.48	(0.11)
14.50 15-Jul-21	15.49	15.29	(0.17)
16.39 27-Jan-22	15.09	14.87	(0.02)
14.20 14-Mar-24	15.09	14.87	(0.03)
12.50 22-Jan-26	15.60	15.45	(0.01)
16.29 17-Mar-27	15.47	15.35	(0.10)
13.98 23-Feb-28	15.54	15.36	0.01
12.15 18-Jul-34	15.50	15.24	0.00
12.40 18-Mar-36	15.55	15.23	(0.01)
16.2499 18-Apr-37	15.36	15.20	0.06

Source: Zedcrest Dealing Desk

Treasury Bills

The T-bills market remained bearish, with yields rising higher by c.10bps as the CBN further tightened system liquidity via a c.10bn OMO sale.

We expect yields to remain pressured as market players anticipate continued OMO interventions by the CBN.

Treasury Bills
Description	Bid (%)	Offer (%)	Day Change (%)
14-Feb-19	15.75	14.40	0.50
14-Mar-19	15.00	14.20	0.00
4-Apr-19	13.10	12.25	0.10
2-May-19	13.80	13.00	(0.20)
13-Jun-19	13.65	13.40	(0.10)
18-Jul-19	13.70	13.50	(0.30)
1-Aug-19	14.25	13.65	(0.05)
12-Sep-19	15.05	14.70	(0.05)
3-Oct-19	15.05	14.45	(0.05)
14-Nov-19	15.05	14.70	(0.05)
5-Dec-19	15.00	14.85	(0.10)

Source: Zedcrest Dealing Desk

Money Market

Rates in the money market remained elevated, with the OBB and OVN rates closing the day at 25.00% and 27.25% as system liquidity which is currently estimated to be in negative territory was further pressured by a c.N10bn OMO sale by the CBN.

We expect rates to remain at current levels, as there are no significant inflows expected tomorrow.

Money Market Rates
	Current (%)	Previous (%)
Open Buy Back (OBB)	25.00	25.83
Overnight (O/N)	27.25	28.00

Source: FMDQ, Zedcrest Research

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.90/$ (spot) and N358.13/$ (SMIS). The NAFEX rate in the I&E window depreciated further by c.0.05% to N365.87/$ from N365.68/$ previously. At the parallel market, the cash rate depreciated by c.0.08% to N359.80/$, while the transfer rate remained unchanged at N364.00/$.

FX Market
	Current (N/$)	Previous ( N/$)
CBN Spot	306.90	306.90
CBN SMIS	358.31	358.31
I&E FX Window	365.87	365.68
Cash Market	359.80	359.50
Transfer Market	364.00	364.00

Source: CBN, FMDQ, REXEL BDC

Eurobonds

The NGERIA Sovereigns flattened in today’s session, having posted strong gains in the last two sessions. Yields ticked marginally higher by c.1bp on the back of slight weakness on the longer end of the curve.

In the NGERIA Corps, investors were bullish on the Access 21s Sub, FBNNL 21s, Access 21s snr and FIDBAN 22s.

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