CBN Avoids OMO Sale, as System Liquidity Dips to Negative

Proshare

Monday, February 18 2019  06:00 PM / Zedcrest Capital 

***Pension fund equals 7.4% of GDP at N8.63trn*** - PENCOM

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

$42.84bn

As at February 15, 2019. A c.0.02% decrease from $42.86bn on February 14, 2019

Brent Crude

$66.30pb

As at February 18, 2019. A c.3.48% increase from $65.58pb on February 15, 2019

 

Bonds

The Bond Market opened the week on a relatively quiet note, as market players digested news of the postponed Nigerian Elections. Yields rose marginally higher by c.6bps following slight sell on the 2028s, in anticipation of renewed supply of the bond at the FGN auction scheduled for Wednesday. Market players however remained well bid on the longer end of the curve, especially the 37s which compressed by c.9bps on the day.

 

We expect the market to remain relatively stable as investors have maintained a relatively bullish posture despite the impending risks of the elections.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

15.12

14.56

0.03

16.39 27-Jan-22

14.65

14.23

0.31

14.20 14-Mar-24

14.59

14.48

(0.01)

12.50 22-Jan-26

14.82

14.55

0.14

16.29 17-Mar-27

14.80

14.61

0.13

13.98 23-Feb-28

14.87

14.77

0.09

12.15 18-Jul-34

14.60

14.33

(0.02)

12.40 18-Mar-36

14.60

14.26

(0.01)

16.2499 18-Apr-37

14.40

14.10

(0.09)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market turned slightly bearish in today’s, with yields higher by c.7bps in response to the liquidity squeeze from the wholesale FX sale by the CBN. The CBN floated a N30bn OMO auction, but issued a no sale result despite the significant subscription of c.N128bn. This was in a bid to avoid heightening the liquidity pressures in the system.

We expect yields to remain slightly elevated in view of the estimated negative system liquidity levels.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

12.00

11.50

0.00

4-Apr-19

13.50

12.90

0.40

2-May-19

12.00

11.00

0.00

13-Jun-19

13.00

11.00

0.00

18-Jul-19

13.50

12.50

0.00

1-Aug-19

13.00

12.80

0.05

12-Sep-19

14.65

14.40

0.05

3-Oct-19

15.00

14.85

0.10

14-Nov-19

14.95

14.75

0.05

5-Dec-19

14.95

14.80

0.05

2-Jan-20

15.05

14.90

0.05

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market spiked by c.7pct with system liquidity estimated to have dipped to a negative level of c.N45bn on the back of the wholesale FX auction by the CBN. The OBB and OVN rates consequently ended the session at 23.33% and 26.08%.

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

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

23.33

15.83

Overnight (O/N)

26.08

17.50

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate depreciated by 0.02% to N306.80/$ at the spot market, while the SMIS rate remained unchanged at N357.10/$. The NAFEX rate in the I&E window depreciated by c.0.12% to N362.07/$. At the parallel market, the cash rate depreciated by 0.14% to N358.20/$, while the transfer rate remained unchanged at N365.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.80

306.75

CBN SMIS

357.10

357.10

I&E FX Window

362.07

361.65

Cash Market

358.20

357.70

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns opened the week on a relatively calm note, with bids slightly weaker at the open due to slight risk off stance in view of the postponed Nigerian elections and slower demand in absence of US flows.

 

The NGERIA Corps were relatively quiet, with slight interests on the SEPLLN 23s following sustained gains in Oil prices. We however witnessed slight selloff on the ACCESS 21s Snr.

 


Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

 

 

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