Diamond Bank Eurobond Rallies 800bps Following Merger Announcement

Proshare

Monday, December 17, 2018/ 05:54PM / Zedcrest Capital


***CBN spends $11bn on forex this year***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at December 14, 2018. A c.2bps increase from 11.26% recorded in October 2018

MPR

14.00%

Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting

External Reserves

$42.88bn

As at December 13, 2018. A c.0.12% increase from $42.83bn on December 12, 2018

Brent Crude

$60.65pb

As at December 17, 2018. A c.0.03% decrease from $60.67pb on December 14, 2018

 

Bonds

The FGN Bond market opened the week on a relatively flat note, with only slight interests seen on the 2028 and 2037 bonds, while yields remained unchanged on the day.

 

We expect yields to tick slightly higher mostly on the short and mid tenors in the build up to the FGN bond auction scheduled to hold on Wednesday.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.28

14.90

0.00

14.50 15-Jul-21

15.78

15.48

0.03

16.39 27-Jan-22

15.12

14.88

0.02

14.20 14-Mar-24

15.26

15.10

0.00

12.50 22-Jan-26

15.82

15.58

0.03

16.29 17-Mar-27

15.70

15.61

(0.01)

13.98 23-Feb-28

15.84

15.70

(0.02)

12.15 18-Jul-34

15.72

15.60

(0.02)

12.40 18-Mar-36

15.68

15.55

0.01

16.2499 18-Apr-37

15.59

15.43

(0.03)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market opened the week on a relatively flat note, with yields relatively unchanged on the day. This was as the CBN maintained its OMO intervention in the market, with a total sale of c.N20bn of the N150bn offered and with rates maintained across tenors. We however observed slight buying interests on some short and mid tenors as some market players took positions in anticipation of some client demand from the forthcoming PMA maturities (c.N25bn) to be fully repaid by the DMO.

 

We expect yields to remain elevated as the CBN is expected to maintain its spate of OMO interventions, which would put further pressure on system liquidity.

 


Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Jan-19

15.00

14.50

(0.50)

14-Feb-19

14.50

13.50

(0.50)

14-Mar-19

14.00

13.00

(0.20)

4-Apr-19

14.00

12.85

(0.35)

2-May-19

13.30

13.00

0.00

13-Jun-19

13.65

13.30

0.10

18-Jul-19

14.00

12.75

0.00

1-Aug-19

14.90

14.25

(0.10)

12-Sep-19

15.10

14.90

(0.05)

3-Oct-19

15.10

14.80

(0.05)

14-Nov-19

14.95

14.80

(0.10)

5-Dec-19

15.05

14.90

(0.05)

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market opened the week higher, with the OBB and OVN rates closing the day at 36.67% and 38.58% respectively. This was as the CBN maintained its OMO and wholesale FX interventions in the Interbank. System liquidity is consequently estimated at c.N80bn negative from a positive level of c.N21bn opening the day.

We expect rates to remain elevated, with the CBN expected to maintain its pace of OMO issuance ahead of the c.N472bn in OMO maturities on Thursday. 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

36.67

24.57

Overnight (O/N)

38.58

27.21

Source: FMDQ, Zedcrest Research 

 

 

FX Market

At the Interbank, the Naira/USD spot rate depreciated by c.0.02% to at N306.95/$, while the SMIS rate remained unchanged at N359.24/$ (SMIS). At the I&E FX window, the NAFEX closing rate appreciated marginally by c.0.01% to close at N365.18/$ from N365.23/$ previously.

 

At the parallel market, the cash and transfer rate depreciated by 0.55% and 0.27% to N365.00/$ and N367.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.90

CBN SMIS

359.24

359.24

I&E FX Window

365.18

365.23

Cash Market

365.00

363.00

Transfer Market

367.00

366.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Sovereigns opened the week on a slightly weaker note, with yields trending higher by c.6bps on average. We witnessed continued retracement  from a recent uptrend mostly on the mid to long end of the curve, as investors price in expectations for a rate hike by the US FED at its 19th Dec FOMC meeting.

 

In the NGERIA Corps, today was the DIAMBK story with yields on the DIAMBK 19s gaining a whooping 800bps on the day, following announcement of a merger deal with ACCESS Bank Plc, which consequently doused fears of debt default on the bond maturing in five months. There were however slight sell on the ACCESS senior and subordinated 2021 bonds.

 


Proshare Nigeria Pvt. Ltd.



 Proshare Nigeria Pvt. Ltd.

 

 

 

Related News

 

1.       Average Yields on Long Term Bills Remain at Over 17.0% on Aggressive OMO Mop Ups

2.       Average Market Rate Rose By 0.69% To Settle At 25.89% As CBN Continued Its Liquidity Mop Up

3.       T-Bills Market Ends Bearish as CBN Conducts Special OMO Auction

4.       Funding Rates Moderate, as Market Players Undersubscribe CBN OMO

5.       Bond Yields Pare Losses amid Renewed Local Demand

6.       Invest in FGN Monthly Bond Auction – December 2018

7.       System Liquidity Falls To Negative Territory Amid Continued OMO Auctions

8.      Money Market Rates hit Five Month High as CBN Maintains OMO Interventions

9.       Sukuk Offer Opens at 15.743%; Average T-Bills Rate Advanced 73bps to 14.4% Sustaining Bearish Run

10.   Average Money Market Rate Rose to 8.24% to Settle at 25.21%

 

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