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Bond market turns bearish as CBN Sells N117bn T-bills

Proshare

Wednesday, November 29, 2017/6.00PM/Zedcrest Capital 

KEY INDICATORS

Inflation

15.91%

Declined by 0.07% in October from 15.98% in September 2017

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting of November 2017

External Reserves

$34.53billion

Accreted 2.04% as at 24th November from $34.49bn on 23rd November 2017

Brent Crude

$62.99pb

Fell by 0.14% from $63.08pb on 24th November 2017

 

Bonds
The bond market turned bearish today, as market players took profits on their positions in absence of any significant demand from clients. Average bond yields consequently rose by 8bps to 14.65%. We expect this trend to persist tomorrow, however at a slower pace, as inflows from N16bn bond coupon payments (May 2018 maturity) are expected to fuel some client interests on bonds. 

Benchmark FGN Bond Yields

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

14.65

14.58

0.07

15.54 13-Feb-20

14.68

14.61

0.27

14.50 15-Jul-21

14.85

14.78

0.04

16.39 27-Jan-22

14.46

14.39

0.07

14.20 14-Mar-24

14.76

14.69

0.08

12.50 22-Jan-26

14.68

14.61

0.07

16.29 17-Mar-27

14.82

14.75

0.02

12.15 18-Jul-34

14.52

14.45

0.02

12.40 18-Mar-36

14.50

14.43

0.06

16.25 18-Apr-37

14.54

14.47

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Zedcrest Dealing Desk

Treasury Bills
The T-bills market traded on a relatively quiet note, with slight sell still witnessed on some December maturities, however at a slower pace than in the previous session. The Medium to long end traded flat, as market activity was overshadowed by the PMA of today. The CBN sold the exact volume of N117.17bn on offer at the PMA. It however shifted volumes from the 91 and 182 day bills due to the significant demand on the 364-day which cleared at 15.57%. We expect the market to be slightly bullish tomorrow, as market players anticipate inflows of N133bn from OMO T-bill maturities. 

Benchmark Treasury Bills Rates

Description

Bid (%)

Offer (%)

Day Change (%)

7-Dec-17

17.40

17.15

1.00

4-Jan-18

16.65

16.40

0.05

1-Feb-18

17.50

17.25

0.70

1-Mar-18

15.40

15.15

0.00

5-Apr-18

16.90

16.65

0.00

3-May-18

17.55

17.30

0.00

14-Jun-18

17.40

17.15

(0.05)

5-Jul-18

17.45

17.20

0.20

2-Aug-18

16.75

16.50

0.00

20-Sep-18

15.30

15.05

0.00

4-Oct-18

15.25

15.00

0.00

Source: Zedcrest Dealing Desk 

NTB Auction Result  - 29 November 2017

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91 days

12.95

26.14

7.89

7.89

182 days

15.00

11.00

6.21

6.21

364 days

15.57

80.03

119.69

103.07

Source: CBN 


Money Market
The OBB and OVN rates remained relatively stable to close at 11.17% and 11.92%. System liquidity is also estimated to remain relatively unchanged from its opening level of N30bn negative. We expect rates to decline slightly tomorrow, due to N133bn OMO maturity inflows. This is however barring a possible retail SMIS by the CBN, which could push cost of funds above 20%. 

 

Money Market Rate

 

Current (%)

Previous (%)

Open Buy Back (OBB)

11.17

12.67

Overnight (O/N)

11.92

13.58

Source: FMDQ, Zedcrest Research   

FX Market
The CBN Official spot rate appreciated slightly by 0.02% to N305.75/$ from its previous day rate of N305.80/$. Its external reserves is also recorded to have improved by 2.04% to $34.53billion as at 24th of November 2017. Rates at the Investors and exporters FX window closed at N360.02/$ from N360.37/$ in the previous session. Rates at the parallel market however stayed flat at N361.70/$.  

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.75

305.80

CBN SMIS

330.00

330.00

I&E FX Window

360.02

360.37

Parallel Market

361.70

361.70

Source: CBN, FMDQ, REXEL BDC 


For more details email 
research@zedcrestcapital.com or call the dealing desk via 01-6311667 

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