Bond Yields Tick Higher following Rumours of CBN Governor Removal

Proshare

Tuesday, March 05, 2019  06:40 AM / Zedcrest Capital

***CBN bans FX for textile import, plans single digit lending for sector***

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

$42.40bn

As at March 4, 2019. A c.0.19% increase from $42.32bn on March 1, 2019

Brent Crude

$65.67pb

As at March 5, 2019. A c.0.71% decrease from $66.14pb on March 4, 2019

 

Bonds

The FGN Bond Market traded on a mixed note, with yields trending markedly higher following slight sell off earlier in the session. We however observed renewed buying interests on the mid to long end of the curve later in the session, with the uptrend in yields consequently thinning out to c.3bps on the day.

 

Market players are believed to have initially reacted to rumours of a removal (terminal leave) of the CBN Governor before the expiration of his tenure in June. Following reassurances by the apex bank of the contrary, we do not see scope for a further spike in yields as witnessed in today’s session.  

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.73

14.24

0.26

16.39 27-Jan-22

14.58

14.20

0.17

12.75 27-Apr-23

14.71

14.19

0.00

14.20 14-Mar-24

14.18

13.90

0.08

13.53 23-Mar-25

14.61

14.15

0.00

12.50 22-Jan-26

14.31

13.87

0.05

16.29 17-Mar-27

14.26

14.14

(0.03)

13.98 23-Feb-28

14.24

14.15

0.01

12.15 18-Jul-34

14.07

13.98

(0.08)

12.40 18-Mar-36

14.12

14.03

(0.04)

16.2499 18-Apr-37

14.09

13.96

(0.06)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market remained slightly bearish as the CBN sustained its OMO interventions with a total sale of N28.58bn and N140.58bn on the 100 and 192-day bills offered at the auction. The 192-day bill remained oversubscribed just as the CBN cut the stop rate further by 3bps to 13.45% whilst stop rates were unchanged at 11.90% on 100-day bill offered. The Secondary market yields consequently trended higher by c.20bps on the day.

We expect the market to remain scantily traded, as market players look forward to the possibility of a long tenor OMO offering on Thursday where we have c.N129bn in Maturing OMO bills.

OMO  - 5 March 2019

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

100 day

11.90

50.00

28.58

28.58

192 day

13.45

100.00

149.33

140.58

 

 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

10.00

8.50

0.00

4-Apr-19

11.00

5.00

0.00

2-May-19

11.50

8.50

0.50

13-Jun-19

11.80

11.00

(0.10)

18-Jul-19

12.50

12.30

0.00

1-Aug-19

13.00

10.05

1.00

12-Sep-19

13.55

13.45

0.05

3-Oct-19

13.60

13.45

0.10

14-Nov-19

13.75

13.50

0.25

5-Dec-19

13.75

13.40

0.30

2-Jan-20

13.65

13.35

0.15

6-Feb-20

13.50

13.20

0.40

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market declined further by c.4pct, as system liquidity remained moderately robust following inflows from Paris club refunds and I&E FX purchases by the CBN. 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)

9.33

14.00

Overnight (O/N)

10.42

14.92

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 0.06% to N360.77/$ following continued inflows from FPIs into the market. At the parallel market, the cash and transfer rates remained unchanged at N358.00/$ and N364.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

356.92

356.92

I&E FX Window

360.77

360.98

Cash Market

358.00

358.00

Transfer Market

364.50

364.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns remained bearish, with yields trending higher by c.9bps on the day.

 

In the NGERIA Corps, we witnessed renewed demand for the DIAMBK 19s whilst Investors were slightly bearish on the ACCESS 21s Snr.

 


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd. 

 

 

Related News

1.       NSE Enhances Capacity of Dealing Members On Fixed Income Trading

2.      Investors Panic as CBN Cuts off Long Tenor OMO Offering

3.      March 2019 FGN Savings Bonds Offer For Subscription

4.      Money Market Rate Increased As Overnight Rate Fell To 17.42%

5.      Bond Yields Retreat Following Slight Profit Taking on 10-Year

6.      NSE Organises Fixed Income Trading Workshop to Enhance Capacity of Dealing Members

7.      First SEC Approved 15-Year Corporate Green Infrastructure Bond in the Nigerian Debt Capital Markets

8.     CBN Cuts 1yr OMO rate by 70bps following N1.2trn Demand

9.      Post -Election: Where Are Fixed Income Yields Headed?


Proshare Nigeria Pvt. Ltd.


READ MORE:
Related News
SCROLL TO TOP