Bond Market OpensFlat, as Market Players Await Auction

Proshare

Monday, September 24,  2018 / 06:31PM / Zedcrest Capital

***Oil Prices At 4-year High after OPEC Rebuffs Trump***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.23%

As at September14, 2018,9bps up from 11.14% recorded in July 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$44.89bn

As atSeptember 20, 2018. A c.0.11% decrease from $44.94bnon Sept. 19, 2018

Brent Crude

$80.16pb

As at September24, 2018. A c.0.89% increasefrom$79.45pbon Sept. 21, 2018

 

 

Bonds

The Bond market opened the week on a relatively quiet note, with some interests on the higher yielding 2021 bond, offset by some selloff on the 2036s which pushed yields higher by c.7bps across the curve. We observed a slowdown in client demand unlike sentiments witnessed for the most part of the previous week. This could be largely attributed to expectations for renewed supply at the forthcoming bond auction (Wednesday), where the DMO intends to raise a total of N90bn from the 2023, 2025 and 2028 maturities.

 

We consequently expect the market to remain slightly bearish, in anticipation of renewed supply of bonds at the auction.

                                                                                                                                                                

 

Secondary Market Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.14

13.10

0.28

14.50 15-Jul-21

15.08

15.01

(0.09)

16.39 27-Jan-22

14.75

14.42

0.04

14.20 14-Mar-24

15.02

14.82

0.00

12.50 22-Jan-26

15.23

15.10

0.13

16.29 17-Mar-27

15.18

15.09

0.03

13.98 23-Feb-28

15.23

15.12

0.04

12.15 18-Jul-34

15.44

15.27

0.07

12.40 18-Mar-36

15.43

15.35

0.08

16.2499 18-Apr-37

15.41

15.29

0.07

Source: Zedcrest Dealing Desk 

 

Treasury Bills

The T-bills market traded on a relatively flat note, with mixed trading sentiments witnessed over the course of the day. The short-tenured maturities (Oct-Dec) were the most actively traded, with yields closing slightly higher by c.10bps due to funding needs by some market players for the Wholesale FX auction by the CBN.

 

We expect the market to remain stable in the near term, due to the relatively buoyant level of liqudity in the system. We however note a slow down in demand from clients as they anticipate a renewed supply of the long tenured bills (Aug/Sep - which offer the highest yield in the market) at the next CBN OMO auction expected Thursday.

 

Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

4-Oct-18

13.50

8.00

2.95

1-Nov-18

14.00

11.10

1.45

6-Dec-18

13.00

12.00

0.50

3-Jan-19

12.15

11.85

(0.15)

14-Feb-19

12.80

12.55

(0.05)

14-Mar-19

12.85

12.30

0.30

4-Apr-19

12.45

12.10

(0.20)

18-Jul-19

13.20

12.50

0.20

1-Aug-19

13.35

12.70

0.15

Source: Zedcrest Dealing Desk 

 

 

Money Market

The OBB and OVN rates inched higher, closing today at 8.33% and 9.08% respectively. This came on the back of funding for a wholesale FX auction (c.N75bn est.) by the CBN. System liquidity which opened the day at c.N478bn is consequently estimated to close at c.400bn positive.

 

We expect rates to remain stable, as there are no significant outflows expected tomorrow.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.33

4.00

Overnight (O/N)

9.08

4.75

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the CBN spotratedepreciated by 0.02% to N306.35/$, while the SMIS rate remained unchanged at N360.94/$.At the I&E FX window the NAFEX closing rate depreciatedby c.0.16% to its highest level in more than a year at N364.28/$ from N363.68/$ previously.At the parallel market, the cashand transfer rates remained unchanged at N359.80/$ and N362.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.35

306.30

CBN SMIS

360.94

360.94

I&E FX Window

364.28

363.68

Cash Market

359.80

359.80

Transfer Market

362.00

362.00

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA Sovereignstraded flat on the day, with only slight interests seen on the 2030 and 2032 bonds. A bank holiday in South Africa resulted in a relatively slower trading session.

 

The NGERIA Corpswere slightly bearish, with some selloff seen on the GRTBNL 18s, Zenith 19s and FBNNL 21s.

 

 

 

 Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

 

Related News

1.       Bond Yields Compress Further on Renewed Local Demand

2.      Resurgent Interests in EM Bolsters Nigerian Eurobonds to 6-Week High

3.      Market players Oversubscribe 1yr PMA Bill by c.250%

4.      Bond Yields Weaken Following Renewed Local Supply on the Long End

5.      Average T-Bills Rate Rose 184bps WoW Amidst Buoyant System Liquidity

6.      Bond Yields Moderate Further Amid Tighter Supply

7.      Average T-bills Yield Rose Significantly by 208bps to Close the Week at 14.43%

8.     Markets Take a Breather as CBN Pauses on OMO

9.      Market Players Selloff Bills above 14% as CBN extends OMO offer to the 1-year

10.  Yield Curve Nears Inversion as DMO Clears 1-Year Bill at 15.60% eff. Yield

11.   Market Players Risk off T-bills, as CBN Elongates OMO Tenor above the 300day Mark

12.  Ahead of Next T-bills Auction Scheduled for 12th Sept, 2018

13.  Market Players Demand Higher Rates for OMO, as PMA Approaches

 

READ MORE:
Related News
SCROLL TO TOP