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DMO Sells N90bn of 3, 5 and 10-yr Bonds at About 3 times Bid to Cover

Proshare

Thursday, April 26, 2018 /07:28 AM / Zedcrest Capital 

***Minimum wage fireworks begins Thursday with public hearing***
 

KEY INDICATORS

Inflation

13.34%

Declined by 0.99% in March from 14.33% in February 2018

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018

External Reserves

$47.01billion

Accreted 1.52% as at 16 April from $46.92bn as at 13 April 2018

Brent Crude

$73.16pb

Fell by 1.00% from $73.90pb on 24 April 2018

 
Bonds

The Bond market opened on a slightly weaker note, but strengthened over the course of trading as market players cherry-picked on the medium to long end of the curve (24s - 37s), which were traded down to c.12.85 - 12.75 pct., in anticipation of lower clearing rates at the FGN bond auction. Yields consequently compressed by c.5bps, with very little action observed on the shorter end of the curve. We expect the market to open slightly stronger tomorrow due to the huge amount of lost bids at the auction which cleared at 2.9X bid to cover. 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

11.28

9.98

(0.01)

15.54 13-Feb-20

11.89

11.36

0.05

14.50 15-Jul-21

12.75

12.19

0.22

16.39 27-Jan-22

12.68

11.88

(0.07)

14.20 14-Mar-24

12.88

12.81

(0.15)

12.50 22-Jan-26

13.10

12.71

(0.04)

16.29 17-Mar-27

12.93

12.86

(0.15)

12.15 18-Jul-34

12.98

12.90

(0.13)

12.40 18-Mar-36

12.86

12.68

(0.12)

16.25 18-Apr-37

12.92

12.73

(0.07)


Source: Zedcrest Dealing Desk
 

FGN Bond Auction Result

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N’bn)

Apr-23

12.75

30.00

52.89

38.29

Mar-25

12.85

30.00

49.40

12.75

Feb-28

12.89

30.00

160.19

38.96

Source: DMO 


Treasury Bills
The T-bills market traded on a relatively flat note, with yields ticking slightly higher by c.7bps on the short and medium end of the curve, as market players slightly improved on their offers in anticipation of an OMO auction by the CBN tomorrow. We expect the market to be relatively muted in tomorrow’s session, barring a surprise Non-OMO issuance by the CBN. 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Jun-18

10.30

8.80

(0.20)

5-Jul-18

11.00

9.50

0.00

2-Aug-18

10.60

9.60

(0.20)

13-Sep-18

11.00

10.75

0.00

4-Oct-18

10.60

10.35

(0.10)

1-Nov-18

11.25

10.75

(0.35)

6-Dec-18

11.25

11.00

0.05

3-Jan-19

11.80

10.50

0.00

14-Feb-19

11.80

10.30

(0.10)

14-Mar-19

11.50

10.30

(0.20)

Source: Zedcrest Dealing Desk 

Money Market
The OBB and OVN rates remained stable at 2.83% and 3.00% respectively. This was as there were no pressures on system liquidity estimated to be relatively unchanged at c.N400bn positive. We expect inflows from OMO T-bill maturities (c.N267bn) and retail FX refunds (c.N150bn) to keep rates relatively stable tomorrow. 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.83

2.58

Overnight (O/N)

3.00

3.00

Source: FMDQ, Zedcrest Research 


FX Market
The Interbank rate remained stable at its previous rate of N305.65/$, with the CBN’s external reserves recorded to have improved by 1.53% to $47.01bn as at 16-April. The NAFEX rate depreciated by 0.15% to N360.51/$, while rates in the Unofficial market however remained stable at N361.40/$.

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.65

305.65

CBN SMIS

330.00

330.00

I&E FX Window

360.51

360.00

Parallel Market

361.40

361.40

Source: CBN, FMDQ, REXEL BDC 

Eurobonds

The NGERIA Sovereigns fell back into negative territory, as investors turned bearish on bonds across the SSA space, following further uptick in USTs, with the 10yr now above 3%. We witnessed the most sell on the 30-yr 2047 bonds which lost as much as 2pts, down now to 101.30/101.90. 

The
NGERIA Corps
also turned bearish, with investors selling off across all tickers, mostly on the FBNNL21s and the Zenith and UBANL 22s. The SEPLLN 23s also traded a touch lower at 101.375, now trading wider at 101.35/102.15.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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