CBN OMO Repayment Moderates Funding Rates

Proshare

Thursday, February 14, 2018/ 07:00 PM / Zedcrest Capial

***NESG forecast GDP growth by 3.2% in 2019***

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

$42.89bn

As at February 12, 2019. A c.0.01% decrease from $42.89bn on February 12, 2019

Brent Crude

$63.71pb

As at February 14, 2019. A c.0.01% increase from $63.70pb on February 13, 2019

 

Bonds

The Bond Market remained fairly stable in today’s session, with yields compressing further by c.2bps, owing to slightly demand by market players who remained well bid on the mid to long end of the curve.

 

We do not expect any significant changes to the recent sluggish trend ahead of the elections, but sentiments remain tilted towards a bullish stance on the back of an overall bullish EM trend and expectations for renewed demand post elections. Expectations for renewed supply of bonds at the Auction nextweek should however keep buying interests in check in the near term.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.02

14.66

(0.07)

14.50 15-Jul-21

14.95

14.32

0.06

16.39 27-Jan-22

14.61

14.35

(0.01)

14.20 14-Mar-24

14.70

14.60

(0.01)

12.50 22-Jan-26

14.76

14.70

(0.01)

16.29 17-Mar-27

14.85

14.76

(0.03)

13.98 23-Feb-28

14.66

14.59

(0.05)

12.15 18-Jul-34

14.64

14.53

(0.03)

12.40 18-Mar-36

14.53

14.49

0.00

16.2499 18-Apr-37

15.02

14.66

(0.07)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market traded with mixed sentiments as an OMO auction by the CBN forced slight sell on some short tenor bills. The CBN sold a total of c.N507bn OMO bills of the N650bn it offered, in a bid to check the excess inflows from the maturing OMO bills. Demand was mostly skewed to the 364-day offering (c.N440bn), with rates maintained at previous levels.

We expect yields to remain slightly elevated with the system liquidity expected to compress slightly from the Retail FX funding by banks tomorrow.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

12.00

11.50

0.00

4-Apr-19

15.00

13.50

2.40

2-May-19

13.50

11.00

2.25

13-Jun-19

13.00

11.00

1.00

18-Jul-19

13.75

12.50

0.75

1-Aug-19

13.00

12.75

0.05

12-Sep-19

14.50

14.30

0.00

3-Oct-19

14.80

14.70

0.00

14-Nov-19

14.90

14.85

(0.05)

5-Dec-19

14.95

14.80

0.00

2-Jan-20

15.00

14.85

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market slid lower by c.6pct, as OMO repayments of c.N800bn by the CBN bolstered system liquidity significantly to c.N120bn positive. The OBB and OVN rates consequently ended the session at 15.00% and 16.00% respectively.

We expect rates to trend slightly higher tomorrow, due to expected funding for the bi-weekly retail FX sale by the CBN

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.00

20.00

Overnight (O/N)

16.00

23.17

Source: FMDQ, Zedcrest Research

 

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.75/$(spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window however appreciated by c.0.04% to N361.85/$, while the cash and transfer rates at the parallel market remained unchanged at N360.00/$ and N365.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.75

306.75

CBN SMIS

357.10

357.10

I&E FX Window

361.85

362.03

Cash Market

359.00

359.00

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

 

 

Eurobonds

The NGERIA Sovereigns weakened slightly in today’s session, with yields ticking higher by c.4bps on the back of some profit taking mostly around the mid-tenors.

 

In the NGERIA Corps, there was slight sell on the DIAMBK 19s and FBNNL 21s.

 

 


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 

 

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5.      January 2019 FGN Bond Auction Oversubscribed

6.      Money Market Rate Increased As Overnight Rate Rose To 11.86%

7.      Flour Mills Commercial Paper Offers 14.75% Yield; Offer Closes On Wednesday

8.     Monthly Fixed Income Review For January 2019

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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