Bonds & Fixed Income | |
Bonds & Fixed Income | |
4139 VIEWS | |
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Monday, December 17, 2018/ 05:54PM / Zedcrest Capital
***CBN
spends $11bn on forex this year***
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 12th Consecutive Time at the
Nov. 22, 2018 MPC Meeting |
External Reserves |
$42.88bn |
As at December 13, 2018. A c.0.12% increase from $42.83bn on
December 12, 2018 |
Brent Crude |
$60.65pb |
As at December 17, 2018. A c.0.03% decrease from $60.67pb on December 14, 2018 |
Bonds
The FGN Bond market opened the
week on a relatively flat note, with only slight interests seen on the 2028 and
2037 bonds, while yields remained unchanged on the day.
We expect yields to tick slightly
higher mostly on the short and mid tenors in the build up to the FGN bond
auction scheduled to hold on Wednesday.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
15.28 |
14.90 |
0.00 |
14.50 15-Jul-21 |
15.78 |
15.48 |
0.03 |
16.39 27-Jan-22 |
15.12 |
14.88 |
0.02 |
14.20 14-Mar-24 |
15.26 |
15.10 |
0.00 |
12.50 22-Jan-26 |
15.82 |
15.58 |
0.03 |
16.29 17-Mar-27 |
15.70 |
15.61 |
(0.01) |
13.98 23-Feb-28 |
15.84 |
15.70 |
(0.02) |
12.15 18-Jul-34 |
15.72 |
15.60 |
(0.02) |
12.40 18-Mar-36 |
15.68 |
15.55 |
0.01 |
16.2499 18-Apr-37 |
15.59 |
15.43 |
(0.03) |
Source: Zedcrest Dealing Desk
Treasury
Bills
The T-bills market opened the week on a relatively flat note, with
yields relatively unchanged on the day. This was as the CBN maintained its OMO
intervention in the market, with a total sale of c.N20bn of the N150bn offered
and with rates maintained across tenors. We however observed slight buying
interests on some short and mid tenors as some market players took positions in
anticipation of some client demand from the forthcoming PMA maturities
(c.N25bn) to be fully repaid by the DMO.
We expect yields to remain elevated as the CBN is expected to
maintain its spate of OMO interventions, which would put further pressure on
system liquidity.
Treasury
Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
3-Jan-19 |
15.00 |
14.50 |
(0.50) |
14-Feb-19 |
14.50 |
13.50 |
(0.50) |
14-Mar-19 |
14.00 |
13.00 |
(0.20) |
4-Apr-19 |
14.00 |
12.85 |
(0.35) |
2-May-19 |
13.30 |
13.00 |
0.00 |
13-Jun-19 |
13.65 |
13.30 |
0.10 |
18-Jul-19 |
14.00 |
12.75 |
0.00 |
1-Aug-19 |
14.90 |
14.25 |
(0.10) |
12-Sep-19 |
15.10 |
14.90 |
(0.05) |
3-Oct-19 |
15.10 |
14.80 |
(0.05) |
14-Nov-19 |
14.95 |
14.80 |
(0.10) |
5-Dec-19 |
15.05 |
14.90 |
(0.05) |
Source: Zedcrest Dealing Desk
Money
Market
Rates in the
money market opened the week higher, with the OBB and OVN rates closing the day
at 36.67% and 38.58% respectively. This was as the CBN maintained its OMO and
wholesale FX interventions in the Interbank. System liquidity is consequently
estimated at c.N80bn negative from a positive level of c.N21bn opening the day.
We expect rates
to remain elevated, with the CBN expected to maintain its pace of OMO issuance
ahead of the c.N472bn in OMO maturities on Thursday.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
36.67 |
24.57 |
Overnight (O/N) |
38.58 |
27.21 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD spot
rate depreciated by c.0.02% to at N306.95/$, while the SMIS rate remained
unchanged at N359.24/$ (SMIS). At the I&E FX window, the NAFEX closing rate
appreciated marginally by c.0.01% to close at N365.18/$ from N365.23/$
previously.
At the parallel market, the cash
and transfer rate depreciated by 0.55% and 0.27% to N365.00/$ and N367.00/$
respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.90 |
CBN SMIS |
359.24 |
359.24 |
I&E FX Window |
365.18 |
365.23 |
Cash Market |
365.00 |
363.00 |
Transfer Market |
367.00 |
366.00 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
The NGERIA Sovereigns opened the week on a
slightly weaker note, with yields trending higher by c.6bps on average. We
witnessed continued retracement from a
recent uptrend mostly on the mid to long end of the curve, as investors price
in expectations for a rate hike by the US FED at its 19th Dec FOMC
meeting.
In the NGERIA Corps, today was the DIAMBK
story with yields on the DIAMBK 19s gaining a whooping 800bps on the day,
following announcement of a merger deal with ACCESS Bank Plc, which
consequently doused fears of debt default on the bond maturing in five months.
There were however slight sell on the ACCESS senior and subordinated 2021
bonds.
Related News
1. Average Yields
on Long Term Bills Remain at Over 17.0% on Aggressive OMO Mop Ups
2. Average Market Rate Rose By 0.69% To Settle At 25.89% As
CBN Continued Its Liquidity Mop Up
3. T-Bills Market Ends Bearish as CBN Conducts Special OMO
Auction
4. Funding Rates Moderate, as Market Players Undersubscribe
CBN OMO
5. Bond Yields Pare Losses amid Renewed Local Demand
6. Invest in FGN Monthly Bond Auction – December 2018
7. System Liquidity
Falls To Negative Territory Amid Continued OMO Auctions
8. Money Market Rates hit Five Month High as CBN Maintains
OMO Interventions
9. Sukuk Offer Opens at 15.743%; Average T-Bills Rate
Advanced 73bps to 14.4% Sustaining Bearish Run
10. Average Money Market Rate Rose to 8.24% to Settle at
25.21%