Bond Yields Retreat Following Slight Profit Taking on 10-Year

Proshare

Saturday March 02, 2019 / 03:30 AM / Zedcrest Capital

***Sustained Rally on Long Tenor Bills following OMO Rate Cut***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.37%

As at February 15, 2019. A c.7bps decline from 11.44% recorded in December 2018

MPR

14.00%

Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$42.31bn

As at February 23, 2019. A c.0.12% decrease from $42.33bn on February 22, 2019

Brent Crude

$65.45pb

As at March 1, 2019. A c.1.31% decrease from $66.32pb on February 28, 2019

 

Bonds

The FGN Bond Market retreated slightly in today’s session with yields trending higher by c.11bps due to some profit taking mostly on the 2028 bond towards the end of the trading session.

 

We expect trading sentiments to be cautious in the near term, with local market players more inclined to take profit at sub-14% levels.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.99

13.61

0.52

16.39 27-Jan-22

15.03

14.14

0.44

12.75 27-Apr-23

14.31

13.50

0.30

14.20 14-Mar-24

13.91

13.50

(0.37)

13.53 23-Mar-25

14.15

13.87

(0.13)

12.50 22-Jan-26

14.27

13.49

0.03

16.29 17-Mar-27

14.23

13.96

0.02

13.98 23-Feb-28

14.13

14.04

0.16

12.15 18-Jul-34

14.13

13.89

0.06

12.40 18-Mar-36

14.29

13.92

0.26

16.2499 18-Apr-37

14.15

13.81

0.13

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

Following the signifcant oversubscription at the previous day’s OMO auction, the T-bills market remained signifcantly bullish, with the most demand on the long end of the curve which rallied by as much as 100bps to trade at a low of 12.85% (on the 20-Feb) during the session.

We expect the market to remain depressed in the near term, due to the paucity of offers especially on the long end of the curve. This is however barring a renewed OMO offering by the CBN.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

9.00

8.50

(1.00)

4-Apr-19

11.00

5.00

0.00

2-May-19

10.80

8.65

0.00

13-Jun-19

10.00

5.00

0.00

18-Jul-19

12.20

11.90

(0.40)

1-Aug-19

12.25

9.00

0.00

12-Sep-19

13.45

12.80

0.25

3-Oct-19

13.50

13.15

(0.25)

14-Nov-19

13.40

13.25

(0.40)

5-Dec-19

13.75

13.25

(0.25)

2-Jan-20

13.50

13.25

(0.50)

6-Feb-20

13.50

13.15

(0.50)

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market rose further by c.3pct due to funding for a Retail FX sale which was slightly moderated by inflows from FAAC payments into the system. The OBB and OVN rates consequently ended the session at 16.33% and 17.42% respectively.

We expect rates to remain elevated with the CBN expected to resume its weekly wholesale FX intervention on Monday.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

16.33

13.17

Overnight (O/N)

17.42

14.25

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, rates remained unchanged at N306.85/$ (Spot) and N356.97/$ (SMIS). The NAFEX rate in the I&E window retreated slightly by 0.01% to N361.03/$. At the parallel market, the cash and transfer rates remained unchanged at N358.00/$ and N365.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.85

CBN SMIS

356.97

356.97

I&E FX Window

361.03

360.99

Cash Market

358.00

358.00

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were slightly weaker in today’s session, with yields marginally higher by c.2bps on the day.

 

In the NGERIA Corps, we witnessed slight interests 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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