Bond Yields Weaken Further As Traders Set Sight on Auction

Proshare

Monday, September 22, 2018/ 08.01PM / Zedcrest Capital

***Labour to Embark on Indefinite Strike over Minimum Wage***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at October16, 2018,5bps up from 11.23% recorded in August 2018.

MPR

14.00%

Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting

External Reserves

$42.72bn

As atOctober19, 2018. A c.0.14% decrease from $42.78bnon October18, 2018

Brent Crude

$79.78pb

As at October 22, 2018. A c.0.46% decreasefrom$80.15pbon October 19, 2018

 

 

Bonds

The bond market was largely order driven in today’s session, with sight sell witnessed on some short and mid tenured maturities which pushed the yield curve c.3bps higher on the day.

 

We expect the market to be relatively muted, as market players cautiously anticipate the forthcoming auction which is expected to clear slightly above its previous levels across the tenors on offer.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.19

13.59

0.08

14.50 15-Jul-21

15.02

14.70

0.09

16.39 27-Jan-22

14.73

14.20

0.04

14.20 14-Mar-24

15.09

14.96

(0.06)

12.50 22-Jan-26

15.03

14.96

0.10

16.29 17-Mar-27

15.16

15.08

0.05

13.98 23-Feb-28

15.33

15.25

0.03

12.15 18-Jul-34

15.33

15.28

(0.01)

12.40 18-Mar-36

15.29

15.13

0.00

16.2499 18-Apr-37

15.18

15.12

(0.01)

Source: Zedcrest Dealing Desk 

 

 

Treasury Bills

Interests within the T-bills Space were largely focused on the short end of the curve (Nov – Jan) which compressed by c.30bps, as market players cherypicked on attractive rates (>c.12.50%) on that end, whilst they mainatined a risk off stance to maturities on the longer end, in anticpation of a further OMO Auction by the CBN later this week.

 

We expect the market to be slightly bearish in the build up to the OMO auction, as system liquidty is expected to tighten further, following a Wholesale SMIS by the CBN today.

 


Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Nov-18

13.15

12.55

(0.25)

6-Dec-18

12.90

12.55

(0.20)

3-Jan-19

13.10

12.65

(0.20)

14-Feb-19

13.00

12.80

(0.40)

14-Mar-19

12.90

12.65

(0.35)

4-Apr-19

12.90

12.50

0.20

18-Jul-19

13.50

13.20

(0.10)

1-Aug-19

13.70

13.10

0.00

12-Sep-19

13.80

13.75

(0.15)

3-Oct-19

13.75

13.55

(0.05)

Source: Zedcrest Dealing Desk 

 

 

Money Market

In line with our expectations, the OBB and OVN ratestrended higher by c.10bps, closing today at 20.00% and 22.29%, as market players reacted to funding pressures from the c.N75bn wholesale SMIS by the CBN.

 

We expect rates to remain elevated tomorrow, as there are no significant inflows expected.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

20.00

12.67

Overnight (O/N)

22.29

13.33

Source: FMDQ, Zedcrest Research 

 

 

FX Market

At the Interbank, the NGN/USDSpot rate depreciated by 0.02% to N306.55/$, while the SMIS rate remained unchanged at N362.52/$. At the I&E FX window a total of $244.69mn was traded in 275 deals, with rates ranging between N358.00/$ - N365.00/$. The NAFEX closing rate depreciated marginallyby c.0.02% toN364.09/$ from N364.02/$ previously.

                                                                     

At the parallel market, the cash rate depreciated significantly by 80k to N361.00/$, while the transfer rate remained unchanged at N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.55

306.50

CBN SMIS

362.52

362.52

I&E FX Window

364.09

364.02

Cash Market

361.00

360.20

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were relatively mixed in today’s session, as market players were better buyers of the shorter tenured maturities, whilst remaining slightly bearish on the longer tenured bonds, with special focus on the 2032s and 2038s.

               

In the NGERIA Corps, we saw renewed interests on the DIAMBK 19s, ACCESS 21s Snr and SEPLLN 23s.

 

 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

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