Coupon Payments Bolster Demand on 10-year FGN Bond

Proshare

Tuesday, February 26, 2019  06:00 AM / Zedcrest Capital

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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

$42.53bn

As at February 22, 2019. A c.0.12% decrease from $42.58bn on February 21, 2019

Brent Crude

$64.88pb

As at February 25, 2019. A c.3.18% decrease from $67.01pb on February 22, 2019

 

Bonds

The Bond market remained firmly bullish, with yields compressing marginally by c.9bps on average. This was following strong buys around the mid tenors’ with the most demand on the 2028s (-16bps) which had coupons totalling c.N49bn paid on the maturity.

 

Market players have maintained a relatively strong bullish appetite given renewed expectation for a smooth conclusion of the electoral process. Barring any significant upheavals in the coming days, we expect the bullish interests to persist.

 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.96

14.53

(0.06)

16.39 27-Jan-22

14.76

14.43

(0.01)

14.20 14-Mar-24

14.44

14.32

(0.04)

12.50 22-Jan-26

14.59

14.23

(0.14)

16.29 17-Mar-27

14.55

14.40

(0.24)

13.98 23-Feb-28

14.59

14.52

(0.16)

12.15 18-Jul-34

14.50

14.16

(0.02)

12.40 18-Mar-36

14.50

14.14

(0.07)

16.2499 18-Apr-37

14.39

14.12

(0.05)

Source: Zedcrest Dealing Desk

 

Treasury Bills

Yields in the T-bills market ticked slightly higher in today’s session, due to the relative illiquidity in the system which caused bids to weaken mostly on the short and mid tenors. Market players however sustained demand for the long tenured bills, with offers still relatively scarce on that end of the curve.

We expect the market to remain relatively stable tomorrow, as market players await the PMA (Wednesday) and a further likely OMO auction on Thursday.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

9.50

8.50

0.50

4-Apr-19

11.50

10.00

0.50

2-May-19

12.00

10.75

(0.25)

13-Jun-19

12.10

10.50

0.05

18-Jul-19

12.75

12.45

0.25

1-Aug-19

12.80

12.30

0.10

12-Sep-19

14.15

13.90

0.15

3-Oct-19

14.60

14.30

0.10

14-Nov-19

14.90

14.65

0.00

5-Dec-19

14.95

14.65

0.10

2-Jan-20

15.00

14.75

0.10

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market dipped slightly by c.1pct as coupon payments on the 2028s bond slightly improved system liquidity. The OBB and OVN rates consequently ended the session at 17.64% and 18.79% respectively.

We expect rates to remain elevated tomorrow as system liquidity pressures persist.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

17.64

18.83

Overnight (O/N)

18.79

20.25

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate depreciated by 0.02% to N306.85/$ at the spot market, while the SMIS rate remained unchanged at N356.97/$. The NAFEX rate in the I&E window remained relatively unchanged at N361.54/$. At the parallel market, the cash and transfer rates appreciated by 0.11% and 0.14% to N357.80/$ and N365.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.80

CBN SMIS

356.97

356.97

I&E FX Window

361.54

361.49

Cash Market

357.80

358.20

Transfer Market

365.50

366.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

Buying interests resurfaced in the NGERIA Sovereigns, with the most interests seen on the 47s and 49s. Yields were consequently lower by c.6bps on the day.

 

In the NGERIA Corps, we witnessed slight interests on the ACCESS and ECOTRA 21s.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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