Bargain Hunt on Short Tenors Bills ahead of PMA

Proshare

Tuesday, October 16, 2018 / 07:41AM / Zedcrest Capital


***Inflation Rises Marginally to 11.28% in Sept. 2018 *** - NBS

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

$43.00bn

As atOctober15, 2018. A c.0.60% decrease from $43.26bnon October12, 2018

Brent Crude

$81.59pb

As at October 16, 2018. A c.1.34% increasefrom$80.51pbon October 15, 2018

 

 

Bonds

The bond market remained relatively flat in today’s session, with only slight buys seen on the 2028s which compressed yields marginally by c.1bp on average. This came on the back of a softer than expected inflation figure for the month of September, which ticked marginally higher by c.5bps on the back of rising food costs.

 

We expect the market to remain range bound in the near term, as market players are expected to maintain a relatively risk off stance ahead of the forthcoming Bond Auction.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.03

13.61

(0.05)

14.50 15-Jul-21

14.95

14.59

0.09

16.39 27-Jan-22

14.53

14.02

(0.01)

14.20 14-Mar-24

15.02

14.84

0.00

12.50 22-Jan-26

14.93

14.88

(0.01)

16.29 17-Mar-27

15.15

15.08

(0.01)

13.98 23-Feb-28

15.27

15.21

(0.01)

12.15 18-Jul-34

15.27

15.19

0.02

12.40 18-Mar-36

15.27

15.11

(0.01)

16.2499 18-Apr-37

15.12

14.97

(0.09)

Source: Zedcrest Dealing Desk 

 

 

Treasury Bills

The T-bills market was generally slightly bearish, with yields ticking higher by c.15bps on the back of expectations for the PMA tomorrow. We however noted signifcant demand for bills on the shorter end of the curve (Jan maturities), as market players priced in expectations for lower clearing rates on the tenor at tomorrow’s PMA.

 

Due to the relatively tight level of system liquidity, and expectations for a possible supply of the PMA bills at the next day’s OMO, we expect rates at the auction tomorrow to clear slightly above their previous levels.

 

NTB PMA Expectations

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

5.85

10.90 - 11.20

10.90

182 days

29.25

12.00 - 12.30

12.10

364 days

112.54

13.35 - 13.55

13.33

 

 


Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Nov-18

13.35

12.90

(0.15)

6-Dec-18

12.90

12.65

0.00

3-Jan-19

12.55

12.35

0.05

14-Feb-19

12.80

12.50

(0.05)

14-Mar-19

12.70

12.45

(0.15)

4-Apr-19

12.55

12.25

0.05

18-Jul-19

13.25

12.90

0.25

1-Aug-19

13.30

13.00

0.05

12-Sep-19

13.50

13.35

0.25

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates, though declining slightly, remained elevated at 24.14% and 26.50% respectively, as system liquidity is estimated to be much unchanged from its opening levels of c.N50bnpositive.

 

We expect rates to remain to remain slightly above the 20% mark, as there are no significant inflows expected tomorrow.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

24.14

39.92

Overnight (O/N)

26.50

44.33

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained stable at N306.45/$ (spot) and N362.52/$ (SMIS). At the I&E FX window a total of $198.71mn was traded in 367 deals, with rates ranging between N360.00/$ - N365.50/$. The NAFEX closing rate depreciated by c.0.11% toN364.33/$ from N363.92/$ previously.

 

At the parallel market, the cash rate depreciated by 20k to N360.20/$ while the transfer rates remained unchanged at N363.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.50

306.50

CBN SMIS

362.52

362.52

I&E FX Window

364.33

363.92

Cash Market

360.20

360.00

Transfer Market

363.50

363.50

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA sovereigns remained firmly in positive territory, with yields compressing further by c.4bps as investors continued with the recent bargain hunting across most of the maturities.

               

There were no noteworthy trades for us in the NGERIA Corps, except for mild axes on the FIDBAN 22s (sell) and SEPLLN 23s (buy).

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

Related News

 

1.       Bond Market Opens Bearish as Weakness in Mid-Tenors Persist

2.       Treasury Bill Auction Schedule For October 17th 2018

3.       Money Market Rate Decreased Marginally as OVN and OBB Fell to 19.75% and 19.17% Respectively

4.       Bond Market Turns Bearish Following Selloff on Mid-Tenors

5.       FBN Nigeria Eurobond (USD) Fund Mitigating Minimum Entry Investment Required for Eurobonds

6.       T-bills Market Trades Flat, as CBN Mops up c.N249bn in OMO Sale

7.       Yields Compress Marginally, with Interests on the Short Tenors

8.      Eterna Plc Proposes Issuance of N10bn 270 Day Commercial Paper

9.       FGN Eurobond Yields Trend Higher as Presidency Seeks Approval for New Issue

10.   Flour Mills of Nigeria Plc Bond Issuance Closes Today

11.    C and I Leasing Lists N7bn Fixed Rate Bond on FMDQ Platform

 

READ MORE:
Related News
SCROLL TO TOP