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Bond Yields close relatively stable amid slight profit taking by offshores

Proshare

Friday, April 20, 2018 /9:30 PM / Zedcrest Capital

***Nigeria’s debt level under control*** – Adeosun
 

KEY INDICATORS

Inflation

13.34%

Declined by 0.99% in March from 14.33% in February 2018

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018

External Reserves

$47.01billion

Accreted 1.52% as at 16 April from $46.92bn as at 13 April 2018

Brent Crude

$73.78pb

Fell by 1.19% from $74.67pb on 19 April 2018


Bonds

The bond market closed the week on a calmer note, with mixed trading witnessed throughout the session, as yields struggled to find new levels following the OMO rate cut by the CBN in the previous session. Investors remained bullish on the 37s, whilst we witnessed some profit taking on the 27s and 34s, following initial buys on the bonds. Yields consequently compressed by 1bp. We expect yields to tick slightly higher in the coming week, due to slight profit taking sentiments at these levels.
 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

11.36

10.03

(0.10)

15.54 13-Feb-20

11.75

11.19

0.08

14.50 15-Jul-21

12.73

12.38

(0.23)

16.39 27-Jan-22

12.56

11.68

(0.13)

14.20 14-Mar-24

13.02

12.71

0.33

12.50 22-Jan-26

13.04

12.84

0.05

16.29 17-Mar-27

12.93

12.90

0.00

12.15 18-Jul-34

13.04

12.99

0.01

12.40 18-Mar-36

12.98

12.77

(0.02)

16.25 18-Apr-37

12.88

12.69

(0.12)


Source: Zedcrest Dealing Desk
 


Treasury Bills

The T-bills market remained bullish, especially on the short end of the curve (May - Jun) which compressed by c.100bps, with most of the maturities traded down to single digit levels. The Medium to long end compressed slightly by c.10bps, with most of the maturities now trading within the 10 - 12pct band. We expect the market to be relatively flat in the near term, with no significant interest in bills at current levels. This is as market players anticipate the next OMO auction by the CBN, expected on Thursday when we have c.267bn in maturing OMO bills.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-May-18

7.75

6.75

(1.25)

14-Jun-18

11.40

9.40

0.00

5-Jul-18

11.50

10.00

0.00

2-Aug-18

11.30

10.30

0.00

13-Sep-18

11.20

10.20

(0.30)

4-Oct-18

10.60

10.35

(0.20)

1-Nov-18

11.60

10.60

(0.20)

6-Dec-18

11.00

10.75

(0.20)

3-Jan-19

12.20

10.70

0.00

14-Feb-19

12.20

10.70

0.00

14-Mar-19

12.20

10.70

(0.30)

Source: Zedcrest Dealing Desk 

Money Market

The OBB and OVN rates declined slightly to 3.00% and 3.75%, as there were no pressures on system liquidity currently estimated at c.N450bn. We expect rates to be relatively stable in the near term, due to the buoyant system liquidity and the slowdown in OMO issuance by the CBN. 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.00

4.08

Overnight (O/N)

3.75

4.67

Source: FMDQ, Zedcrest Researc h

FX Market

The Interbank rate remained stable at its previous rate of N305.60/$, with the CBN external reserves recorded to have improved by 1.53% to $47.01bn as at 16-April. The NAFEX rate depreciated further by 0.03% to N360.42/$, while the total volume traded rose by 66% to $223m. Rates in the Unofficial market also depreciated by 0.03% to N361.40/$.

 

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.60

305.60

CBN SMIS

330.00

330.00

I&E FX Window

306.42

360.31

Parallel Market

361.40

361.30

Source: CBN, FMDQ, REXEL BDC   

Eurobonds

The NGERIA Sovereigns were bearish across all maturities, following rise in US treasuries to new highs, with the 10-yr now above 2.90%. The 2047s were the most hit, losing as much as 1.20pt. Yields consequently rose by c.10bps across the curve.
 

The NGERIA Corps were also bearish, with the most hits on the ACCESS 21s and the UBANNL and FIDBAN 22s. The SEPLLN 23s were also a touch lower, last traded at 101.25, -0.50pt lower.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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