Bond Yields Moderate on Renewed Demand Interests

Proshare

Saturday, January 26, 2019   09:48PM / Zedcrest Capital


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 13th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$43.11bn

As at January 25, 2019. A c.0.02% decrease from $43.12bn on January 24, 2019

Brent Crude

$61.56pb

As at January 25, 2019. A c.1.47% increase from $60.67pb on January 24, 2018

 

Bonds

The bond market closed the week on a positive note, as yields closed lower by c.5bps on average across the curve. Demand interests remained on the mid- & long-end as yields compressed on the 28s (-7bps) and 37s (-14bps) respectively, while there were smaller volumes traded on other maturities.

 

We however expect the market to open next week on a slightly bearish note, as market players take new positions ahead of the forthcoming auction.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.41

14.87

(0.11)

14.50 15-Jul-21

15.55

15.19

(0.05)

16.39 27-Jan-22

15.09

14.79

(0.02)

14.20 14-Mar-24

15.00

14.90

0.00

12.50 22-Jan-26

15.29

15.10

(0.03)

16.29 17-Mar-27

15.29

15.04

0.00

13.98 23-Feb-28

15.41

15.22

(0.07)

12.15 18-Jul-34

15.36

15.14

(0.04)

12.40 18-Mar-36

15.25

15.17

(0.03)

16.2499 18-Apr-37

15.19

15.13

(0.14)

Source: Zedcrest Dealing Desk


 

Treasury Bills

The T-bills market closed the week on a calm note, as market focus remained on another OMO sale by the CBN. The Apex bank maintained stop rates at the auction while selling a total of N71.54bn across three (3) maturities on offer.

We expect yields to open the week higher due to expectations for continued OMO and FX interventions by the CBN.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

13.50

12.00

0.45

14-Mar-19

13.00

11.00

(0.05)

4-Apr-19

13.00

11.60

(0.05)

2-May-19

12.10

11.90

(0.10)

13-Jun-19

13.00

12.00

0.00

18-Jul-19

13.30

13.15

(0.20)

1-Aug-19

13.65

13.30

(0.05)

12-Sep-19

14.50

14.15

0.05

3-Oct-19

14.85

14.60

0.05

14-Nov-19

14.90

14.80

0.00

5-Dec-19

14.95

14.80

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market remained relatively stable, despite another OMO sale of c.N71.54bn. System liquidity is estimated to close at c.N15bn from c.N86bn opening the day, with the OBB and OVN rates ending the session at 12.08% and 13.00% respectively.

We expect funding rates to open the week higher as market participants provide funding for the weekly Wholesale FX interventions by the CBN.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.08

12.33

Overnight (O/N)

13.00

13.00

Source: FMDQ, Zedcrest Research


 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.80/$ (spot) and N357.97/$ (SMIS). The NAFEX rate in the I&E window depreciated marginally by c.0.01% to N362.46/$. Cash and transfer rates in the parallel market however appreciated by c.0.55% and c.0.14% to N361.00/$ and N365.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.80

306.80

CBN SMIS

357.97

357.97

I&E FX Window

362.46

362.43

Cash Market

361.00

363.00

Transfer Market

365.50

366.00

Source: CBN, FMDQ, REXEL BDC

 

 

 

Eurobonds

The bullish run on the NGERIA Sovereigns slowed down in today’s trading session, with yields compressing further by a single basis point on the average across the curve. Demand interests remained at the short- to mid-end of the curve, while yields on the longer end ticked slightly higher. The most interests were seen on the 2027 bond which compressed by c.9bps on the day.

 

The NGERIA Corps saw increased activity, as bids improved on the DIAMBK 19s and FBNNL 21s. We however witnessed slight sell interest on the ACCESS 21s Snr.


 

 Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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