Bond Yields Trend Higher Following Selloff on Mid and Long Tenors

Proshare

Tuesday, April 09 2019  07:30 PM /Zedcrest Capital


***Senate approves N1.64tr new borrowing to fund budget deficit***


KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.31%

As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019

MPR

13.50%

Cut by 50bps to 13.50% at the Mar. 26, 2019 MPC Meeting

External Reserves

$44.68bn

As at April 3, 2019. A c.0.09% increase from $44.65bn on April 2, 2019

Brent Crude

$70.78pb

As at April 9, 2019. A c.0.32% decrease from $71.01pb on April 8, 2019

 

 

Bonds

The FGN Bond market traded on a bearish note, with yields rising higher by c.10bps on the day following some selloff mostly on the 2027s and 2036s towards the close of trading, with yields on both maturities traded as high as 14.75%.

 

We expect yields to remain slightly pressured tomorrow, as selling interests persist especially on the mid to long end of the curve. 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.87

14.33

0.14

16.39 27-Jan-22

14.52

14.03

0.13

12.75 27-Apr-23

14.77

14.42

0.04

14.20 14-Mar-24

14.48

14.34

0.00

13.53 23-Mar-25

14.68

14.30

0.07

12.50 22-Jan-26

14.69

14.56

0.20

16.29 17-Mar-27

14.81

14.66

0.18

13.98 23-Feb-28

14.70

14.65

0.00

12.15 18-Jul-34

14.73

14.43

0.15

12.40 18-Mar-36

14.75

14.59

0.20

16.2499 18-Apr-37

14.46

14.37

0.10

Source: Zedcrest Dealing Desk

 

 

 

Treasury Bills

Trading sentiments in the T-bills market remained relatively flat as buying interests were constrained by the tight system liqudity levels. Traders were better buyers however of some short tenors, while sentiments on the mid to long end of the curve remained slightly bearish.

We expect trading activities to remain relatively muted in the near term, due to the relatively subdued interests for Tbills at current levels.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

2-May-19

10.30

9.90

0.40

13-Jun-19

13.00

11.75

0.00

18-Jul-19

12.00

11.00

0.00

1-Aug-19

12.25

12.00

0.00

12-Sep-19

13.15

12.90

0.00

3-Oct-19

13.10

12.95

(0.05)

14-Nov-19

13.25

13.00

0.00

5-Dec-19

13.20

12.95

0.00

2-Jan-20

13.20

13.00

0.00

6-Feb-20

13.15

12.90

0.00

Source: Zedcrest Dealing Desk

 

 

 

Money Market

Rates in the money market moderated by c.4pct despite the despite the relatively tight system liquidity levels, as banks were able to access the CBN’s SLF for their funding needs. The OBB and OVN rates consequently ended the session at 15.43% and 16.21% respectively.

We expect rates to remain at current levels tomorrow, as there are no significant inflows anticipated.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.43

19.43

Overnight (O/N)

16.21

20.00

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate was unchanged at N307.00/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in the I&E window appreciated marginally by 0.04% to N360.55/$, as market turnover improved by 50% to $132m. At the parallel market, the cash rate depreciated further by 0.14% to N358.90/$, whilst the transfer rate remained unchanged at N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

355.78

355.78

I&E FX Window

360.55

360.68

Cash Market

358.90

358.40

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

 

Eurobonds

The NGERIA sovereigns recorded some gains in today’s session, with yields marginally lower b c.2bps on the day. Whilst we witnessed renewed demand for some short and mid tenors, we witnessed slight sell on the longer end of the curve.

 

In the NGERIA Corps, we witnessed continued interests on the ACCESS 21s Snr, ZENITH 22s and FIDBAN 22s.

                                                                                                                      

 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

 

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