Funding Rates Crash to c.5pct as c.N300bn T-bill Maturity Inflows hit the System

Proshare

Thursday, July 05, 2018 /09:20 PM / Zedcrest Capital

***NAFEX Rate hits 11 Month High at N362.25/$***

KEY INDICATORS

Inflation

11.61%

Declined by 0.87% in May from 12.48% in April 2018

MPR

14.00%

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

External Reserves

$47.63billion

Rose by 0.36% as at 3 July from $47.63bn as at 13 June 2018

Brent Crude

$77.40pb

Fell by 0.87% from $78.08pb on 4 July 2018

 

 

Bonds

The Bond market traded on relatively flat note and remained largely client driven, with renewed supply of the 2036s taking yields slightly higher by c.2bps on average. We expect yields to remain slightly pressured, as market players anticipate release of the Q3 FGN Bond calendar by the DMO.

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

13.36

13.12

(0.01)

14.50 15-Jul-21

13.79

13.67

0.12

16.39 27-Jan-22

13.64

13.27

(0.15)

14.20 14-Mar-24

13.93

13.48

(0.05)

12.50 22-Jan-26

14.23

14.01

0.01

16.29 17-Mar-27

14.14

13.90

(0.05)

13.98 23-Feb-28

14.26

14.00

0.15

12.15 18-Jul-34

14.40

14.15

0.08

12.40 18-Mar-36

14.40

14.30

0.10

16.2499 18-Apr-37

14.33

14.22

(0.03)

Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market remained slightly bullish, with yields declining further by c.10bps on average. This came as the CBN did not conduct an OMO auction despite the inflows from OMO maturities and Net PMA repayments from the previous day’s auction.  We expect the market to remain slightly bullish due to the relatively buoyant level of liquidity in the system. This is however barring a resumption in OMO auction by the CBN.  


Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

2-Aug-18

12.10

11.65

(0.25)

13-Sep-18

12.30

11.75

0.15

4-Oct-18

11.20

11.00

(0.25)

1-Nov-18

12.15

11.95

(0.15)

6-Dec-18

12.20

12.00

(0.15)

3-Jan-19

12.10

11.90

0.00

14-Feb-19

12.00

11.80

(0.10)

14-Mar-19

12.30

11.25

(0.10)

4-Apr-19

12.05

11.00

(0.05)

Source: Zedcrest Dealing Desk

 

Money Market

The OBB and OVN rates crashed significantly by c.13pct to 4.33% and 5.17% respectively. This came on the back of significant inflows from OMO T-bill and PMA repayments (c.N300bn), and anticipated refunds for unsuccessful bids at the previous week’s retail auction sales by the CBN. System Liquidity consequently rose significantly higher to c.N330bn from c.N100bn in the previous session. We expect rates to trend slightly higher tomorrow, due to expected funding for retail FX bids by banks.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.33

17.00

Overnight (O/N)

5.17

18.33

Source: FMDQ, Zedcrest Research 

 

FX Market

The Interbank rate remained stable at its previous rate of N305.70/$, with the CBN’s external reserves recorded to have improved by 0.36% to $47.80bn from $47.63bn on the 13th of June. The NAFEX rate depreciated significantly by 0.24% to an 11-Month high of N362.25/$, as dollar supply remained short of demand in the market. The total volume traded also fell by 17.80% to $147m. In the parallel market, cash rates depreciated by 60k to N359.40/$, while the transfer market rate remained stable at N363.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.70

305.70

CBN SMIS

330.00

330.00

I&E FX Window

365.25

361.40

Cash Market

359.40

358.80

Transfer Market

363.50

363.50

Source: CBN, FMDQ, REXEL BDC

  

Eurobonds:

The NGERIA Sovereigns traded on a firmly bullish note, with yields declining significantly by c.11bps on average. This came on the back of renewed demand across the curve, with the most demand seen on the 38s and 47s which rose by +1.10pt and +0.90pt respectively.

 

The NGERIA Corps were relatively flat, except for slight buying interests seen on the DIAMBK 19s, ACCESS 21s (both) and ZENITHs (19s &22s).

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

 

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