Bond Market Maintains Bullish Trend as Panic Buying Sets In

Proshare

Friday, February 08,  2019  07:40 PM / Zedcrest Capital

***AfDB projects 4% GDP growth for Africa in 2019***

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

$42.97bn

As at February 7, 2019. A c.0.05% decrease from $42.99bn on February 6, 2019

Brent Crude

$61.57pb

As at February 8, 2019. A c.1.22% decrease from $62.33pb on February 7, 2019

 

Bonds

The Bond market remained significantly bullish with yields compressing further by c.11bps as market players continued to aggress offers on the mid to long end of the curve. The buying interests are mostly linked to some offshore interests, but some panic buying by locals have also accentuated the rate of decline in yields which have now compressed by c.20bps w/w.

 

In the coming week, the NBS is expected to release data for Q4 2018 GDP and Jan 2019 inflation. Whilst we expect the economic releases to show slightly improved figures from previous levels, we expect investment appetite to be slightly subdued as market players are expected to trade cautiously in view of the elections scheduled to hold next weekend.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.04

14.16

0.00

14.50 15-Jul-21

14.99

14.58

(0.05)

16.39 27-Jan-22

14.89

14.33

0.01

14.20 14-Mar-24

14.56

14.19

(0.15)

12.50 22-Jan-26

14.74

14.61

(0.11)

16.29 17-Mar-27

14.77

14.58

(0.16)

13.98 23-Feb-28

14.93

14.71

(0.08)

12.15 18-Jul-34

14.69

14.50

(0.23)

12.40 18-Mar-36

14.74

14.55

(0.11)

16.2499 18-Apr-37

14.57

14.37

(0.25)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market turned slightly bullish with market players cherry-picking on attractive yields around the mid tenors, in absence of an OMO auction by the CBN. Yields were consequently lower by c.15bps on the day.

In the coming week we expect yields to trend slightly higher as the CBN is expected to sustain its spate of OMO and FX interventions in the market.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

12.50

10.00

(1.00)

14-Mar-19

12.50

10.00

0.50

4-Apr-19

11.25

11.10

0.10

2-May-19

11.50

10.00

(1.45)

13-Jun-19

12.95

11.75

(0.80)

18-Jul-19

12.95

12.75

(0.35)

1-Aug-19

14.50

14.30

(0.25)

12-Sep-19

14.80

14.50

(0.10)

3-Oct-19

14.95

14.80

0.00

14-Nov-19

14.90

14.80

(0.10)

5-Dec-19

15.00

14.75

0.00

2-Jan-20

15.00

14.90

0.00

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market remained elevated on the back of the significant OMO mop up in the previous session. The OBB and OVN rates consequently ended the session slightly higher at 18.67% and 19.42% respectively.

We expect rates to trend higher opening next week, as the CBN is expected to resume its week wholesale FX intervention amid an already tightened system liquidity environment.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

18.67

17.33

Overnight (O/N)

19.42

18.42

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.70/$ (spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window depreciated marginally by c.0.02% to N361.73/$, whilst the cash and transfer rates at the parallel market remained unchanged at N359.20/$ 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

361.73

361.64

Cash Market

359.20

359.20

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns retreated further in today’s session, with yields trending higher by c.9bps as news of a slowdown in the US-China trade negotiations weighed on risk sentiments in the market.

 

In the NGERIA Corps, yields were relatively flat across board, we however witnessed slight sell interests on the UBANL and FIDBAN 22s, whilst investors were better buyers of the 2021 maturities.



Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

 

Related News

1.       NAFEX Rate Appreciates to Six Month High Amid Renewed FPI Inflows

2.      A Quiet Trading Session as Daily OMO Auction Takes Centre Stage

3.      Market Players Oversubscribe CBN OMO Amid Increased Demand on Short Tenor Bills

4.      NSP-SPV Plc Up to N10Billion 15-Year Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bond

5.      Buoyant Liquidity Level Spurs Buying Interest as Average Yield Compresses to 13.2%WoW

6.      Bond Market Closed On A Bullish Note With Increased Demand Seen On Most Maturities

7.      February 2019 FGN Savings Bonds Offer For Subscription

8.     Bond Yields Break Key Support amid Renewed Offshore Interests

9.      Massive Rally on Eurobonds as US FED Strikes Dovish Tone

10.  Summary of January 2019 FGN Bond Auction Results

11.   Bond Auction Rates Clear Lower With Increased Demand on the 10-yr


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP