Bond Yields Maintain Slight Uptrend Following Selloff on the 20-year

Proshare

Thursday, April 11 2019  07:23AM /Zedcrest Capital


***Nigeria Plans Additional Spending on Improved Revenue in 2019***


KEY INDICATORS


Indicator

Value

Commentary

Inflation

11.31%

As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019

MPR

13.50%

Cut by 50bps to 13.50% at the Mar. 26, 2019 MPC Meeting

External Reserves

$44.70bn

As at April 9, 2019. A c.0.01% increase from $44.69bn on April 8, 2019

Brent Crude

$71.61pb

As at April 10, 2019. A c.1.17% increase from $70.78pb on April 9, 2019

 

 

Bonds

Selling Pressures in the FGN Bond market moderated slightly in today’s session, but with yields still closing the day slightly higher by c.5bps following some selloff on the 2037s which was traded as high as 14.50%.

 

We expect market players to maintain a cautious trading approach as yields are still likely to trend upwards towards the FGN bond auction scheduled to hold later this month. At levels above 14.70%, we expect to see renewed demand interests. 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.97

14.41

0.10

16.39 27-Jan-22

14.56

14.02

0.04

12.75 27-Apr-23

14.68

14.35

(0.09)

14.20 14-Mar-24

14.60

14.28

0.12

13.53 23-Mar-25

14.68

14.30

0.00

12.50 22-Jan-26

14.74

14.40

0.05

16.29 17-Mar-27

14.81

14.62

0.00

13.98 23-Feb-28

14.83

14.66

0.13

12.15 18-Jul-34

14.68

14.43

(0.05)

12.40 18-Mar-36

14.82

14.59

0.07

16.2499 18-Apr-37

14.62

14.48

0.16

Source: Zedcrest Dealing Desk

 

 

 

Treasury Bills

Yields in the T-bills market moderated slightly in today’s session, on the back of some buying interests on some short and mid tenured maturities. The longer end of the curve however remained relatively quiet, with yields lower by c.15bps on the day.

We expect yields to trend slightly higher tomorrow, as system liquidty is expected to further tighten via a likely OMO auction tomorrow and/or a bi-weekly retail FX funding on Friday

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

2-May-19

10.00

9.75

0.00

13-Jun-19

12.30

11.20

0.00

18-Jul-19

11.00

10.30

(1.00)

1-Aug-19

12.00

11.75

(0.25)

12-Sep-19

13.05

12.90

(0.15)

3-Oct-19

13.05

13.00

(0.05)

14-Nov-19

13.10

13.05

(0.20)

5-Dec-19

13.20

13.10

0.00

2-Jan-20

13.20

12.95

0.00

6-Feb-20

13.15

12.95

0.00

Source: Zedcrest Dealing Desk

 

 

 

Money Market

Rates in the money market remained relatively unchanged as system liquidity remained depressed at c.N46bn opening today.

We expect rates to remain elevated tomorrow, due to the tight system liquidity levels and a likely OMO auction which could spook rates higher.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.14

15.43

Overnight (O/N)

16.29

16.21

Source: FMDQ, Zedcrest Research

 

 

 

FX Market

At the Interbank, the Naira/USD rate was unchanged at N307.00/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in the I&E window appreciated further by 0.06% to N360.33/$, as market turnover improved further by 152% to $335m. At the parallel market, the cash rate appreciated slightly by 0.06% to N358.70/$, whilst the transfer rate remained unchanged at N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

355.78

355.78

I&E FX Window

360.33

360.55

Cash Market

358.70

358.90

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA sovereigns turned slightly bearish following selloffs on the mid to long end of the curve. Yields were consequently higher by c.4bps on the day.

 

In the NGERIA Corps, we witnessed strong demand for the ACCESS 21s and some buying interests in the Zenith 22s, FIDBAN 22s and SEPLLN 23s. There were however slight sell interests on the DIAMBK 19s.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


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