Absence of CBN OMO Fuels Rally on Long Tenor Bills

Proshare

Wednesday, February 27, 2019  06:00 AM / Zedcrest Capital

***Shell says Nigeria tax claim will delay Bonga oilfield***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.37%

As at February 15, 2019. A c.7bps decline from 11.44% recorded in December 2018

MPR

14.00%

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

External Reserves

$42.38bn

As at February 22, 2019. A c.0.35% decrease from $42.53bn on February 21, 2019

Brent Crude

$65.32pb

As at February 26, 2019. A c.0.68% increase from $64.88pb on February 25, 2019

 

Bonds

The FGN Bond market remained relatively stable with yields marginally lower by c.1bp on the day. Investors remained slightly bullish, but the strength of the demand had waned from the stance in the previous session.

 

We expect investors to become slightly cautious as we edge closer to announcements of the final election results.

 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.94

14.48

(0.02)

16.39 27-Jan-22

14.72

14.57

(0.04)

14.20 14-Mar-24

14.45

14.34

0.01

12.50 22-Jan-26

14.51

14.27

(0.08)

16.29 17-Mar-27

14.55

14.40

0.00

13.98 23-Feb-28

14.57

14.53

(0.02)

12.15 18-Jul-34

14.52

14.20

0.02

12.40 18-Mar-36

14.50

14.31

0.00

16.2499 18-Apr-37

14.39

14.24

0.00

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a firmly bullish note, with increased demand witnessed mostly on the longer end of the curve. This came on the backdrop of the contiuned absence of a CBN OMO sale for the third consecutive session.

The CBN on behalf of the FG will conduct an NTB auction tomorrow, with a total of c.N115bn T-bills on offer. Given the increased long tenor demand and in view of the relatively lower volumes on offer, we expect stop rates to clear signifcantly lower from their previous levels. The rate of demand aggresiveness should however be moderated by expectations for a renewed OMO offering by the CBN come Thursday.

NTB PMA Expectations

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

24.37

10.65 - 10.95

10.97

182 days

38.75

12.75 - 13.05

13.40

364 days

51.99

14.35 - 14.65

14.95

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

9.50

8.50

0.00

4-Apr-19

11.50

10.00

0.00

2-May-19

12.00

10.75

0.00

13-Jun-19

12.10

10.50

0.00

18-Jul-19

12.75

12.45

0.00

1-Aug-19

12.80

12.30

0.00

12-Sep-19

14.00

13.75

(0.15)

3-Oct-19

14.55

14.25

(0.05)

14-Nov-19

14.65

14.25

(0.25)

5-Dec-19

14.70

14.40

(0.25)

2-Jan-20

14.75

14.25

(0.25)

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market moderated further by c.5pct as system liquidity improved to c.N110bn in absence of the regular CBN OMO auctions

We expect rates to remain relatively unchanged as there are no significantly inflows expected tomorrow. Market players however anticipate significant inflows from FAAC payments before weekend.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

13.79

17.64

Overnight (O/N)

14.71

18.79

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, rates remained unchanged at N306.85/$ (Spot) and N356.97/$ (SMIS). The NAFEX rate in the I&E window remained relatively unchanged at N361.50/$. At the parallel market, the cash and transfer rates remained unchanged at N357.80/$ and N365.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.85

CBN SMIS

356.97

356.97

I&E FX Window

361.50

361.54

Cash Market

357.80

357.80

Transfer Market

365.50

365.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns traded relatively flat, with yields marginally lower by c.1bp on the day.

 

In the NGERIA Corps, we witnessed slight interests on the ACCESS 21s Sub, FBNNL 21s and ECOTRA 21s. Bids however remained relatively weak on the DIAMBK 19s.

 

 Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd. 

 

 

Related News

1.       Coupon Payments Bolster Demand on 10-year FGN Bond

2.      Bullish Sentiment Resurfaces as Average Yield Retreat to 14.2%

3.      Money Market Rate Increased As Overnight Rate Rose to 20.25%

4.      Investors Remain Bullish on FGN Bonds Ahead of Elections

5.      FMDQ Admits Mixta Real Estate (Nigeria) PLC Bonds and Commercial Papers

6.      Market Players Oversubscribe 1-year CBN OMO bill by 181%

7.      Summary of February 2019 FGN Bond Auction Results

8.     February 2019 FGN Bond Auction Oversubscribed

9.      Market Players Oversubscribe FGN Bond Auction by 156%

10.  T-bill Yields Compress as Funding Pressures Ease

11.   CBN Avoids OMO Sale, as System Liquidity Dips to Negative

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP