Bonds & Fixed Income | |
Bonds & Fixed Income | |
3681 VIEWS | |
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Thursday, October 11, 2018 / 07:41AM / Zedcrest Capital
***FG proposes N24,000 minimum wage***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.23% |
As at September14,
2018,9bps up from 11.14% recorded in July 2018. |
MPR |
14.00% |
Left Unchanged
for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting |
External
Reserves |
$43.52bn |
As atOctober9,
2018. A c.0.21% decrease from $43.61bnon October8, 2018 |
Brent Crude |
$83.39pb |
As at October 10,
2018. A c.1.64% decreasefrom$84.78pbon
October 9, 2018 |
Bonds
The
bond market remained relatively quiet, with yields compressing marginally by
c.1bp following slight interests witnessed on the shorter end of the curve (21s
& 22s). Investors also showed interests for the 2025s, whilst we saw better
offers on the longer end of the curve, with yields ticking higher by c.6bps on
the 2037s.
We expect the market to remain largely order driven in the near term, with clients expected to remain attracted to the higher yielding bonds +15% offers. Market players are however expected to maintain a short bias on the auction bonds.
Benchmark FGN
Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
15.54 13-Feb-20 |
13.97 |
13.60 |
0.04 |
14.50 15-Jul-21 |
14.93 |
14.47 |
(0.04) |
16.39 27-Jan-22 |
14.40 |
13.69 |
(0.10) |
14.20 14-Mar-24 |
15.01 |
14.79 |
0.00 |
12.50 22-Jan-26 |
14.83 |
14.78 |
0.02 |
16.29 17-Mar-27 |
15.15 |
14.99 |
0.00 |
13.98 23-Feb-28 |
15.21 |
15.13 |
0.00 |
12.15 18-Jul-34 |
15.20 |
15.16 |
(0.04) |
12.40 18-Mar-36 |
15.20 |
15.05 |
(0.05) |
16.2499 18-Apr-37 |
15.11 |
14.95 |
0.06 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained relatively
quiet in today’s session, with slight bullish sentiments observed on the short
end of the curve (Oct – Jan), but with some more profit taking witnessed on the
longer end of the curve (Sept/Oct) in anticipation of the OMO auction tomorrow.
We expect the CBN to conduct
an OMO auction tomorrow to mop up inflows (c.N277bn) from maturing bills. We
consequently expect the market to maintain a slightly bearish posture, even as
market players anticipate a signifcant drawdown in system liquidity via a
retail FX auction on Friday.
Benchmark FGN Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
1-Nov-18 |
13.00 |
12.85 |
(0.15) |
6-Dec-18 |
12.75 |
12.60 |
(0.35) |
3-Jan-19 |
12.40 |
12.20 |
(0.10) |
14-Feb-19 |
12.85 |
12.65 |
0.20 |
14-Mar-19 |
13.00 |
12.40 |
0.00 |
4-Apr-19 |
12.35 |
12.20 |
(0.15) |
18-Jul-19 |
13.15 |
12.50 |
0.15 |
1-Aug-19 |
13.20 |
12.65 |
0.20 |
12-Sep-19 |
13.25 |
13.00 |
0.15 |
Source: Zedcrest Dealing Desk
Money
Market
The OBB and
OVN rates remained relatively stable, closing today at 9.67% and 10.17% as
system liquidity remained buoyant at c.N190bn positive. The slight decline in
system liquidity from c.N240bn in the previous session came on the back of
outflows for the wholesale FX auction, which had already been provided for on
Monday.
We expect
rates to remain stable, barring a significant OMO sale tomorrow.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
9.67 |
9.17 |
Overnight
(O/N) |
10.17 |
10.00 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained
stable at N306.45/$ (spot) and N361.34/$ (SMIS). At the I&E FX window a
total of $285.05mn was traded in 455 deals, with rates ranging between N350.00/$
- N365.00/$. The NAFEX closing rate remained unchanged at N364.27/$.
At the parallel market, the cash and transfer
rates remained unchanged at N360.00/$ and N363.00/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.45 |
306.45 |
CBN
SMIS |
361.34 |
361.34 |
I&E
FX Window |
364.27 |
364.27 |
Cash
Market |
360.00 |
360.00 |
Transfer
Market |
363.00 |
363.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA sovereigns opened the day on a
slightly positive note, but gave up gains later in the day, with yields closing
c.5bps higher d/d. We witnessed the most losses on the 2038s which lost
c.0.40pct in price terms.
The NGERIA Corps were conversely bullish,
with the most interests seen on the shorter dated tickers. The DIAMBNK 19s
continued to post gains, whilst we also saw good buyers in the GRTBNL 18s,
Zenith 19s and FBNNL 21s.
Related News
1. Funding Rates Spike Following Drain in System
Liquidity
2. CBN Mops up System Liquidity in c.N553bn OMO Sale
3. Seplat Eurobond Surges amid Uptrend in Oil Prices
4. Bond Yields Compress Further as Traders Pull
Back on Offers
5. October 2018 FGN Savings Bond Offer for
Subscription
6. T- Bills Market Reverses Bullish Run as PMA
Holds Tomorrow
7. Money Market Rate Increased as Overnight Rate
Rose to 7.17%
8. Bond Yields Test Key Support in Month End Rally