Bond Yields Tick Higher as Demand Interests Wane

Proshare

Wednesday, March 06, 2019 7.30PM /Zedcrest Capital

***NIRSAL MFB to Provide Funding at 5% Interest to SMEs *** - Emefiele

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

$42.47bn

As at March 5, 2019. A c.0.17% increase from $42.40bn on March 4, 2019

Brent Crude

$65.53pb

As at March 6, 2019. A c.0.21% decrease from $65.67pb on March 5, 2019

 

Bonds

Despite the lesser volumes traded, the market remained slightly bearish, with some profit taking mostly on the 2028s and 2034s. Yields were consequently higher by c.4bps on the day.

 

We expect the market to remain relatively stable towards weekend, even as demand interests decline ahead of the forthcoming gubernatorial elections.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.78

14.24

0.05

16.39 27-Jan-22

14.50

14.12

(0.08)

12.75 27-Apr-23

14.66

14.21

0.00

14.20 14-Mar-24

14.18

13.93

0.00

13.53 23-Mar-25

14.53

14.40

0.00

12.50 22-Jan-26

14.32

13.99

0.01

16.29 17-Mar-27

14.26

14.18

0.00

13.98 23-Feb-28

14.36

14.28

0.12

12.15 18-Jul-34

14.25

14.10

0.18

12.40 18-Mar-36

14.16

14.02

0.04

16.2499 18-Apr-37

14.16

13.98

0.07

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market remained slightly bearish following slight sell off on some short tenor bills. Investors however sustained interests on the longer end of the curve, howbeit, on a softer note.

The CBN held off on conducting an OMO auction in today’s session, but we expect a renewed offering tomorrow due to c.N130bn OMO maturities. 

 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

11.00

8.50

1.00

4-Apr-19

12.00

10.50

1.00

2-May-19

12.00

8.50

0.50

13-Jun-19

12.00

10.50

0.20

18-Jul-19

12.75

12.25

0.25

1-Aug-19

13.00

10.00

0.00

12-Sep-19

13.50

13.35

(0.05)

3-Oct-19

13.65

13.25

0.05

14-Nov-19

13.70

13.40

(0.05)

5-Dec-19

13.70

13.25

(0.05)

2-Jan-20

13.60

13.20

(0.05)

6-Feb-20

13.60

13.05

0.10

Source: Zedcrest Dealing Desk 

 

 

Money Market

Rates in the money market were c.1pct lower as system liquidity remained moderately robust at c.N107bn opening the day. The OBB and OVN rates consequently ended the session at 9.33% and 10.42% respectively.

We expect rates to remain relatively stable, barring a significant OMO sale by the CBN.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.83

9.33

Overnight (O/N)

9.75

10.42

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rates remained unchanged at N306.90/$ (Spot) and N356.92/$ (SMIS). The NAFEX rate in the I&E window appreciated further by 0.16% to N360.19/$, with market turnover rising higher to $552m. At the parallel market, the cash rate remained unchanged at N358.00/$ while the transfer rate appreciated by 0.14% to N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

356.92

356.92

I&E FX Window

360.19

360.77

Cash Market

358.00

358.00

Transfer Market

364.00

364.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

Sentiments on the NGERIA Sovereigns turned positive in today’s session, with demand witnessed especially on the 25s and 49s. Yields were consequently lower by c.6bps on the day.

 

In the NGERIA Corps, Investors turned bullish on the ACCESS 21s Snr following shareholder approval of Merger with DIAMBK. The SEPLLN 23s were however slightly bearish following weaker than expected profit figures.

 

 

 

 Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.

 

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