Bonds & Fixed Income | |
Bonds & Fixed Income | |
3672 VIEWS | |
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Tuesday, November 27, 2018/ 04:51PM / Zedcrest Capital
**Eurobonds for oil producing countries and companies
remain bearish amidst low crude prices***
KEY
INDICATORS
Indicator |
Value |
Commentary |
Inflation |
11.26% |
As at November 21, 2018. A c.2bps down from 11.28% recorded in
September 2018 |
MPR |
14.00% |
Left Unchanged for the 12th Consecutive Time at the Nov.
22, 2018 MPC Meeting |
External Reserves |
$41.52bn |
As at November 22, 2018. A c.0.02% decrease from $41.53bn on November
21, 2018 |
Brent Crude |
$60.06pb |
As at November 26, 2018. A c.1.69% decrease from $59.06pb on November 23, 2018 |
Bonds
Risk-off sentiments on FGN Bonds
continued today as the market opened the week on quiet note. Market trading
volumes remained on a decline with less than N1bn executed intraday, reflecting
the weak appetite for FGN bonds. Consequently,
yields traded flat across the curve, with slight sell-off seen at the short-end
(2020s) and mid-end of the curve (2027s & 2028s).
We expect the market to trade scantily
in the interim as investors weigh-in the effects of lower global oil prices on
government borrowing cost. We retain a cautious outlook on bonds with a bearish
bias till the end of the year.
Benchmark
FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change
(%) |
15.54 13-Feb-20 |
15.00 |
14.27 |
0.08 |
14.50 15-Jul-21 |
15.35 |
15.24 |
0.00 |
16.39 27-Jan-22 |
14.96 |
14.54 |
0.02 |
14.20 14-Mar-24 |
15.28 |
15.02 |
0.00 |
12.50 22-Jan-26 |
15.66 |
15.46 |
0.01 |
16.29 17-Mar-27 |
15.70 |
15.61 |
0.01 |
13.98 23-Feb-28 |
15.90 |
15.84 |
0.04 |
12.15 18-Jul-34 |
15.71 |
15.59 |
(0.01) |
12.40 18-Mar-36 |
15.59 |
15.43 |
(0.02) |
16.2499 18-Apr-37 |
15.58 |
15.45 |
(0.01) |
Source: Zedcrest Dealing
Desk
Treasury
Bills
Trading in the T-bills market was
muted on the day as the CBN conducted an unexpected OMO auction, a divergence
from the usual OMO T-bills maturity vs OMO auction trend in past sessions. We
saw slight bullish sentiments on the short end of the curve, while the medium
to long end of the curve traded bearish due to more supply of OMO T-bills.
The CBN sold
a total of N161.08bn OMO T-bills across two maturities, 192- and 360-days,
while maintaining stop rates at 13.00% and 14.50% respectively.
We expect the market to trade bearish
tomorrow due to the reduced System Liquidity as
well as supply expected from the T-bills PMA to be conducted later in the week.
|
||||||||
Tenor |
Rate (%) |
Offer (₦’bn) |
Sub (₦'bn) |
Sale (₦'bn) |
||||
115 day |
Nil |
30.00 |
Nil |
No Sale |
||||
192 day |
13.00 |
50.00 |
20.07 |
19.07 |
||||
360 day |
14.50 |
100.00 |
145.51 |
142.01 |
||||
|
|
|||||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
||||
6-Dec-18 |
12.55 |
12.30 |
0.05 |
|
||||
3-Jan-19 |
12.65 |
12.40 |
(0.10) |
|
||||
14-Feb-19 |
13.00 |
12.80 |
(0.01) |
|
||||
14-Mar-19 |
13.00 |
12.70 |
(0.20) |
|
||||
4-Apr-19 |
12.80 |
12.45 |
(0.20) |
|
||||
2-May-19 |
12.85 |
12.60 |
0.00 |
|
||||
18-Jul-19 |
13.00 |
12.75 |
0.00 |
|
||||
1-Aug-19 |
13.75 |
13.25 |
0.05 |
|
||||
12-Sep-19 |
14.55 |
14.30 |
0.05 |
|
||||
3-Oct-19 |
14.55 |
14.40 |
0.05 |
|
||||
14-Nov-19 |
14.50 |
14.35 |
0.00 |
|
||||
Source:
Zedcrest Dealing Desk
Money
Market
Money Market
rates increased opening the week, off the back of outflows via the CBN’s OMO
auction as well SMIS FX Wholesale Intervention conducted today. The OBB &
O/N rates closed at 15.17% (from 5.83%) and 15.75% (from 6.58%) respectively.
System liquidity is consequently estimated to close lower at c.N118.38bn
positive.
We expect rates
to remain in double digit territory in the interim as there are no OMO maturities
expected this week. However, market participants may get some respite from FAAC
payments as the month draws to a close.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
15.17 |
5.83 |
Overnight (O/N) |
15.75 |
6.58 |
Source: FMDQ, Zedcrest
Research
FX Market
At the Interbank, the Naira/USD
rate depreciated by c.0.02bps to close at N306.80/$ (spot), from N306.75/$
previously but remained unchanged at N359.81/$ (SMIS). At the I&E FX window
a total of $147.30bn was traded in 303 deals, with rates ranging between N361.00/$
- N365.00/$. The NAFEX closing rate appreciated by c.0.23% to close at N363.85/$
from N364.70/$ previously.
At the parallel market segment, the
cash and transfer rates both remained unchanged to close N364.00/$ and N366.50/$
respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.80 |
306.75 |
CBN SMIS |
359.81 |
359.81 |
I&E FX Window |
363.85 |
364.70 |
Cash Market |
364.00 |
364.00 |
Transfer Market |
366.50 |
366.50 |
Source: CBN, FMDQ, REXEL
BDC
Eurobonds
Recovery in
global oil prices was insufficient to provide respite for sovereign papers of
oil producing countries, and the NGERIA
Sovereigns were no exception. Yields on the NGERIA Sovereigns inched up
further by c.7bps on the average across all the tickers on the curve. The major
losers on the day were the NGERIA 21s and NGERIA 23s losing c.13bps and c.17bps
respectively.
NGERIA Corps showed continued weakness amidst low oil prices. Yield
expanded the most on the SEPLLN 23s by c.25bps, while in a surprise twist
yields compressed on the Zenith 19s by c.127bps.
Related News
1. Treasury Bill
Auction Schedule For November 28th 2018
2. Elevated Liquidity Levels Pressure Rates Lower as PMA
Holds on Wednesday
3. Money Market Rate Decreased Marginally as Overnight Rate
Fell to 6.58%
4. FSDH Research Spots Investment Opportunities in FGN
Savings Bonds for Low-Income Earners
5. Crude Oil prices hit 1-year lows, investor sell-offs hit
Eurobonds
6. Stanbic IBTC - Offer For Subscription Of N30b Series 1
Senior Unsecured Fixed Rate Notes
7. Monetary Policy Remains Unchanged With Minimal Volatility
Expected For The Fixed Income Market
8. Summary of November 2018 FGN Bond Auction Results