| Bonds & Fixed Income |    3379 VIEWS  |
| Bonds & Fixed Income | |
| 3379 VIEWS | |
 |
Tuesday, February 12, 2019 08:10 PM / Zedcrest Capital
***Oil
Jumps As Saudis Plan Further Production Cuts***
KEY INDICATORS
|
Indicator |
Value |
Commentary |
|
Inflation |
11.44% |
As at January 16, 2019. A c.16bps increase
from 11.28% recorded in November 2018 |
|
MPR |
14.00% |
Left Unchanged for the 15th
Consecutive Time at the Jan. 22, 2019 MPC Meeting |
|
External Reserves |
$42.90bn |
As at February 11, 2019. A c.0.12%
decrease from $42.95bn on February 8, 2019 |
|
Brent Crude |
$62.55pb |
As at February 12, 2019. A c.0.97% increase from $61.95pb
on February 11, 2019 |
Bonds
The Bond market traded on a slightly
bearish note on the back of continued profit taking mostly on the 2028s, while
bids got weaker across the curve, as market sentiments dampened in anticipation
of the February Bond auction scheduled to hold next week.
We expect yields to remain slightly
bearish into the new week, with possibility for a further uptick in yields
closer to the 15% mark.
|
Benchmark FGN Bonds |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
15.54 13-Feb-20 |
14.98 |
14.16 |
(0.06) |
|
14.50 15-Jul-21 |
14.99 |
14.58 |
0.00 |
|
16.39 27-Jan-22 |
14.87 |
14.33 |
(0.02) |
|
14.20 14-Mar-24 |
14.59 |
14.19 |
0.03 |
|
12.50 22-Jan-26 |
14.73 |
14.55 |
(0.01) |
|
16.29 17-Mar-27 |
14.75 |
14.58 |
(0.02) |
|
13.98 23-Feb-28 |
14.82 |
14.77 |
(0.11) |
|
12.15 18-Jul-34 |
14.65 |
14.53 |
(0.04) |
|
12.40 18-Mar-36 |
14.68 |
14.59 |
(0.06) |
|
16.2499 18-Apr-37 |
14.51 |
14.39 |
(0.06) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained slightly bearish on the back of the
liquidity squeeze in the money market which caused yields to tick marginally
higher by c.5bps on the day. The CBN also floated a further OMO auction with
market players bidding for c.N22bn of the N65bn offered. The CBN however held
off on sales, most likely due to the significant funding constraints in the
system.
The CBN will conduct an NTB Auction on behalf of the FG tomorrow,
with c.N154bn of the 91, 182 and 364-day bills on offer. Given expectations by
market players for continued OMO auctions by the CBN, we do not expect any
significant changes in stop rates from previous levels.
|
NTB Auction
Expectations |
|||
|
Tenor |
Offer
(N'bn) |
Expected
Rate (%) |
Previous
Rate (%) |
|
91 days |
3.38 |
10.90 -
11.20 |
11.00 |
|
182 days |
10.00 |
13.40 - 13.70 |
13.50 |
|
364 days |
140.00 |
14.90 -
15.20 |
15.00 |
Source: Zedcrest Research
|
Treasury Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14-Feb-19 |
12.30 |
12.00 |
0.30 |
|
14-Mar-19 |
12.50 |
11.25 |
0.50 |
|
4-Apr-19 |
11.50 |
11.25 |
0.15 |
|
2-May-19 |
12.00 |
11.00 |
0.50 |
|
13-Jun-19 |
13.00 |
12.00 |
0.00 |
|
18-Jul-19 |
12.95 |
12.65 |
0.00 |
|
1-Aug-19 |
14.50 |
14.25 |
0.00 |
|
12-Sep-19 |
14.80 |
14.50 |
0.00 |
|
3-Oct-19 |
14.95 |
14.75 |
0.05 |
|
14-Nov-19 |
14.95 |
14.70 |
0.00 |
|
5-Dec-19 |
15.00 |
14.90 |
0.05 |
|
2-Jan-20 |
15.00 |
14.90 |
0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market moderated by
c.20pct as banks were able to access the CBN’s SLF window to fund their
obligations, while the CBN also held off on a further OMO sale in a bid to
alleviate the significant funding pressures in the system. The OBB and OVN
rates consequently ended the session at 24.17% and 27.50% respectively.
We expect rates to remain elevated
tomorrow, as there are no significant inflows expected.
|
Money
Market Rates |
||
|
|
Current
(%) |
Previous
(%) |
|
Open
Buy Back (OBB) |
24.17 |
43.33 |
|
Overnight
(O/N) |
27.50 |
47.50 |
Source: FMDQ, Zedcrest Research
FX Market
At
the Interbank, the Naira/USD rate depreciated by 0.02% to N306.75/$ at the spot
market, while the SMIS rate remained unchanged at N357.10/$. The NAFEX rate in the
I&E window however appreciated by c.0.02% to N361.87/$. At the parallel
market, the cash rate depreciated by c.0.28% to N360.00/$ while the transfer
rate remained unchanged at N365.00/$.
|
FX
Market |
||
|
|
Current
(N/$) |
Previous
( N/$) |
|
CBN
Spot |
306.75 |
306.70 |
|
CBN
SMIS |
357.10 |
357.10 |
|
I&E
FX Window |
361.87 |
361.95 |
|
Cash
Market |
360.00 |
359.00 |
|
Transfer
Market |
365.00 |
365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
Renewed interests in the NGERIA Sovereigns push yields lower by c.14bps, with the rally
mostly fostered by the positive gains in oil market following plans by the
Saudi Government to implement further production cuts.
In the NGERIA
Corps, investors remained slightly bearish on the UBANL 22s, whilst yields
remained relatively flat on other tickers.
Related News
1.
Funding Rates Spike to YTD High as CBN Drains System
Liquidity into Negative
2.
January 2019 FGN
Bond Auction Oversubscribed
3.
Money Market Rate
Increased As Overnight Rate Rose To 11.86%
4.
Flour Mills
Commercial Paper Offers 14.75% Yield; Offer Closes On Wednesday
5.
Monthly Fixed Income
Review For January 2019
6.
Bond Market
Maintains Bullish Trend as Panic Buying Sets In
7.
NAFEX Rate
Appreciates to Six Month High Amid Renewed FPI Inflows
8.
A Quiet Trading
Session as Daily OMO Auction Takes Centre Stage
9.
Market Players
Oversubscribe CBN OMO Amid Increased Demand on Short Tenor Bills
10. NSP-SPV Plc Up to
N10Billion 15-Year Series 1 Guaranteed Fixed Rate Senior Green Infrastructure
Bond
11. Buoyant Liquidity
Level Spurs Buying Interest as Average Yield Compresses to 13.2%WoW
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