Bond Yields Spike in Panic Driven Session

Proshare

Tuesday, August 07, 2018 /06:20PM / Zedcrest Capital

***Osinbajo meets DSS’ most senior director, Seiyefa, Magu***

***Nigerian Central Bank ‘in the Mood for Tightening,’*** - Nnanna

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.23%

As at July 23, 2018, 38bps down from 11.61% recorded in May 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$46.87bn

As atAugust 6, 2018. A c.0.30% decreasefrom $47.01bn as at August 3, 2018.

Brent Crude

$74.40pb

As at August 7, 2018. A c.0.65% increasefrom$73.92pb as atAugust 6, 2018


Bonds

The Bond market witnessed a spur of activity in today’s session, as a flurry of headline political news dominated trading sentiments over the course of the session. We witnessed continued selloff by offshore clients mostly on the 2027s and 2028s as tensions in the political space further strengthened their recent bearish position on the market.

 

We also noted a shift in the date of the scheduled bond auction for the Month of August to 15-Aug from the earlier scheduled date of 22-Aug. This is also believed to have influenced some selloff, especially on the 2028s, as market players anticipate renewed supply of bonds at the auction now scheduled to hold next week. Yields consequently shot higher to close at c.43bps above their previous levels as most market players pulled off on their bids following some selloff on the 2027s to c.14.38% towards the close of trading.

 

The aforementioned notwithstanding, we noticed a relatively slower rate of change in offer prices across other maturities, with slight demand even observed on the 2036s. We consequently expect a narrowing of bid-offer spreads in tomorrow’s session, but with the broader market sentiment expected to remain bearish as we approach the forthcoming bond auction.

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

13.65

13.02

0.37

14.50 15-Jul-21

14.27

13.43

0.63

16.39 27-Jan-22

14.13

13.81

0.39

14.20 14-Mar-24

14.46

13.55

0.79

12.50 22-Jan-26

14.75

14.16

0.63

16.29 17-Mar-27

14.42

14.26

0.35

13.98 23-Feb-28

14.47

14.27

0.23

12.15 18-Jul-34

14.50

14.13

0.27

12.40 18-Mar-36

14.63

14.19

0.43

16.2499 18-Apr-37

14.38

14.11

0.23

Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market remained relatively flat, with most activities focused on the shorter end of the curve. Yields consequently remained relatively flat on average.

We expect a slight downtrend in yields tomorrow, on the back of a relatively buoyant level of system liquidity. Trading activities are however still expected to be focused on the shorter end of the curve


Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

13-Sep-18

11.30

10.70

0.00

4-Oct-18

10.05

9.00

(0.25)

1-Nov-18

11.20

10.85

0.00

6-Dec-18

12.00

11.65

0.05

3-Jan-19

12.10

11.90

0.05

14-Feb-19

12.10

11.95

0.05

14-Mar-19

12.00

11.75

(0.15)

4-Apr-19

12.10

11.40

0.00

18-Jul-19

11.40

10.85

0.05


Source: Zedcrest Dealing Desk

 

Money Market

The OBB and OVN rates remain relatively unchanged, closing today at 7.52% and 8.42% respectively, as there were no significant outflows from the system which opened today at c.N330bn positive according to figures published by the CBN.

 

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

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

7.58

7.92

Overnight (O/N)

8.42

8.50

Source: FMDQ, Zedcrest Researc h

 

FX Market

The Naira remained stable N306.00/$at the interbank market. It however depreciatedby 0.09% at the I&E FX window, closing at N362.30/$ (from N361.96/$ previously).At the parallel market, the cash and transfer market rates remained stable atN358.50/$ and N361.50/$ respectively.

 

Oil prices strengthened furthertoday, with Brent crude futures rising by c.50cents to $74.40pb, even as the Chinese Yuan Denominated futures jumped to an all-time high, creeping above the Brent and WTI. The CBN’s External reserves has however maintained a steady decline, falling by c.0.30% to $46.87bn as at 6-Aug, from $47.01bn on the 3rdof August.


FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.00

306.00

CBN SMIS

330.00

330.00

I&E FX Window

362.30

361.96

Cash Market

358.50

358.50

Transfer Market

361.50

361.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereignsturned bearish in today’s session, with yields rising by c.7bps on average. We witnessed the most selloff on the Jan 2021 which rose by c.12bps, consequently reversing recent gains. The 2038s however lost the most in price terms down by c.0.70pct (+6bps) d/d.

 

Activities in the NGERIA Corpsremained relatively muted, except for slight demand for the FBNNL 21s, following redemption of the FBNNL 20s today. We also witnessed slight selloff on the ACCESS 21s Snr and UBANL 22s.


 Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd.


Related News

1.       Sterling Bank Plc Set to Issue Up to N35bn Series 6 and Series 7 Commercial Paper

2.       Funding Rates Tick Higher as Banks Fund for CBN SMIS

3.       Expected System Liquidity Boost to Sustain Bullish Performance

4.       August 2018 FGN Savings Bonds Offer for Subscription

5.       Fixed Income Market Monitor- Average Bond Yield Fell by 3bps to Close the Week At 13.97%

6.       Bond Yields Tick Higher as Offshore Players selloff on the Mid to Long End

7.       Lafarge Africa Plc Series 7 Commercial Paper Closes Today

8.       CBN Mops up Excess OMO Inflows as SLF Window hits a Record Zero Patronage

9.       Lafarge Africa Plc Series 7 Commercial Paper Now Open

10.   PMA Rates Trend lower as Market Players Oversubscribe the 1-yr bill by 175%

11.   Funding Rates expected to Trend Lower as c.N375bn FAAC Inflows hit the System

12.   Nigeria’s Debt Composition is Now External 30% Domestic 70%- Pat Oniha, DG DMO

13.   Liquidity Levels May Drive Rates Southwards Amid PMA This Week

 

READ MORE:
Related News
SCROLL TO TOP