Funding For CBN Wholesale FX Auction Pressures Short Term Rates Higher

Proshare

Monday, April 09 2019  07:30 AM /Zedcrest Capital


***CBN disbursed N25.4bn to facilitate non-oil exports in 2018*** - Okoroafor

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.31%

As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019

MPR

13.50%

Cut by 50bps to 13.50% at the Mar. 26, 2019 MPC Meeting

External Reserves

$44.68bn

As at April 3, 2019. A c.0.09% increase from $44.65bn on April 2, 2019

Brent Crude

$71.01pb

As at April 8, 2019. A c.1.65% increase from $69.86pb on April 5, 2019

 

 

Bonds

The FGN Bond market traded on a relatively calm note with yields compressing marginally by c.3bps following slight buys on the short end of the curve.

 

We expect interests in the market to remain largely order driven in the near term, with yields expected to remain relatively stable at current levels. 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.73

14.25

(0.06)

16.39 27-Jan-22

14.39

13.92

(0.11)

12.75 27-Apr-23

14.73

14.33

(0.02)

14.20 14-Mar-24

14.48

14.26

(0.03)

13.53 23-Mar-25

14.61

14.34

0.06

12.50 22-Jan-26

14.49

14.27

(0.01)

16.29 17-Mar-27

14.63

14.35

(0.06)

13.98 23-Feb-28

14.70

14.60

0.01

12.15 18-Jul-34

14.58

14.38

0.01

12.40 18-Mar-36

14.55

14.43

0.02

16.2499 18-Apr-37

14.36

14.30

(0.09)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a relatively quiet note, with yields slightly higher by c.5bps, as market liquidity was further tightened due to funding for a wholesale FX auction by the CBN. We however witnessed slight buying interests on some short and mid tenured maturities.

We expect yields to remain relatively stable at current levels, as market players speculate on the possibility for a non-OMO issuance this week, given the relatively minute amount of OMO T-bills (N33bn) maturing Thursday and the tight system liquidity levels.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

2-May-19

9.90

9.65

0.00

13-Jun-19

13.00

11.75

0.00

18-Jul-19

12.00

9.00

0.00

1-Aug-19

12.25

12.00

0.00

12-Sep-19

13.15

12.90

0.00

3-Oct-19

13.15

12.95

0.00

14-Nov-19

13.25

13.00

0.00

5-Dec-19

13.20

12.95

0.00

2-Jan-20

13.20

13.00

0.00

6-Feb-20

13.15

12.90

0.00

Source: Zedcrest Dealing Desk

 

 

 

Money Market

Rates in the money market trended higher by c.4pct due to funding pressures from the wholesale FX auction by the CBN. The OBB and OVN rates consequently ended the session at 19.43% and 20.00% respectively.

We expect rates to moderate slightly tomorrow, as banks would be able to access the CBN’s SLF for their funding needs at slightly lower rates.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

19.43

15.29

Overnight (O/N)

20.00

16.14

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate was unchanged at N307.00/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in the I&E window depreciated by 0.10% to N360.68/$, as market turnover fell by 64% to a one month low of $89m. At the parallel market, the cash rate depreciated marginally by 0.03% to N358.40/$, whilst the transfer rate appreciated by 0.14% to N363.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

355.78

355.78

I&E FX Window

360.68

360.33

Cash Market

358.40

358.30

Transfer Market

363.50

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA sovereigns traded on a relatively flat note with yields marginally lower by c.1bp on the day. Investors were better buyers of the long end and sellers around the belly of the curve.

 

In the NGERIA Corps, we witnessed slight demand for the DIAMBK 19s and Zenith 22s.

                                                                                                                      

 

 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.

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