A Quiet Trading Session as Daily OMO Auction Takes Centre Stage

Proshare

Thursday, February 07, 2019    06:10AM / Zedcrest Capital

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.44%

As at January 16, 2019. A c.16bps increase from 11.28% recorded in November 2018

MPR

14.00%

Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$43.02bn

As at February 5, 2019. A c.0.05% decrease from $43.04bn on February 4, 2019

Brent Crude

$62.61pb

As at February 6, 2019. A c.0.72% decrease from $62.16pb on February 5, 2019

 

Bonds

The Bond market had a quiet trading session, with very little flows seen on select maturities. Yields expanded marginally by c.2bps on the day, as the market marks time ahead of the coming national elections and bond auction later in the month.

 

As demand remains weak for bonds at sub-15% yields, we maintain our expectation for a flat market in the coming weeks.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.15

14.45

0.06

14.50 15-Jul-21

15.07

14.89

(0.02)

16.39 27-Jan-22

14.90

14.46

0.02

14.20 14-Mar-24

14.76

14.47

0.03

12.50 22-Jan-26

14.95

14.76

0.09

16.29 17-Mar-27

15.03

14.90

(0.01)

13.98 23-Feb-28

15.12

15.03

(0.02)

12.15 18-Jul-34

14.99

14.86

(0.01)

12.40 18-Mar-36

15.02

14.85

0.01

16.2499 18-Apr-37

14.98

14.83

0.03

Source: Zedcrest Dealing Desk


 

Treasury Bills

The T-bills market continued to trade on a quiet note, with relatively lower volumes traded as the CBN continued its daily mop-up strategy by floating another OMO auction. Yields across the NTB curve compressed by c.16bps on the average. At the OMO auction, the CBN sold a total of c.N66.02bn while maintaining stop rates across all tenors.

We expect yields to remain relatively flat as the CBN is expected to float a more aggressive OMO auction to mop up maturities of c.N315bn.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

13.00

12.15

0.00

14-Mar-19

11.75

11.35

0.00

4-Apr-19

11.00

10.00

(1.75)

2-May-19

11.00

10.75

(0.50)

13-Jun-19

11.70

11.00

0.20

18-Jul-19

13.00

12.50

0.00

1-Aug-19

13.25

13.00

(0.05)

12-Sep-19

14.70

14.35

0.20

3-Oct-19

14.85

14.35

0.00

14-Nov-19

14.90

14.65

0.00

5-Dec-19

14.95

14.80

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market trended higher by c.1pct as the CBN continued its daily mop-up strategy with a c.N6602bn OMO sale. The OBB and OVN rates consequently ended the session at 20.67% and 21.83% respectively.

We expect rates to crash opening tomorrow as OMO maturities ease up system liquidity levels.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

20.67

19.50

Overnight (O/N)

21.83

20.92

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.75/$ (spot) and N357.10/$ (SMIS). The NAFEX rate however saw a slight depreciation by c.0.15% to close at N362.72/$. At the parallel market, the cash and transfer rates depreciated by c.45k to close at N385.80/$ and N365.00/$ respectively.

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.70

306.70

CBN SMIS

357.10

357.10

I&E FX Window

362.72

362.19

Cash Market

358.20

357.80

Transfer Market

365.00

364.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The recent bullish run on the NGERIA Sovereigns slowed during today’s trading session, with yields compressing by a single basis point. Demand witnessed at the mid-end of the curve, while sell interests stayed at the long-end.

 

Interests for select NGERIA Corps tickers continue to gradually pick up, as demand was witnessed for the UBANL 2022s which compressed by c.13bps on the day.

 

 

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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