Funding Rates Moderate as FAAC Inflows Bolster System Liquidity

Proshare

Tuesday, September 29, 2018/ 06.19PM / Zedcrest Capital


***BPE to raise N300b for 2018 Budget funding*** – Okoh

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at October 16, 2018, 5bps up from 11.23% recorded in August 2018.

MPR

14.00%

Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting

External Reserves

$42.13bn

As at October 29, 2018. A c.0.35% decrease from $42.28bn on October 26, 2018

Brent Crude

$75.72pb

As at October 29, 2018. A c.2.45% decrease from $77.62pb on October 26, 2018

 

 

Bonds

The bond market traded on a relatively flat note, as supply pressures persisted, despite slight interests from clients on some mid and long tenured bonds.

 

We expect yields to maintain an uptrend, due to weaker client demand post the FGN Bond auction, and the continued uplift in T-bill rates on the long end of the curve.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.69

14.16

0.05

14.50 15-Jul-21

15.40

15.05

0.00

16.39 27-Jan-22

14.86

14.39

0.00

14.20 14-Mar-24

15.30

15.02

(0.01)

12.50 22-Jan-26

15.42

15.10

(0.02)

16.29 17-Mar-27

15.44

15.36

(0.06)

13.98 23-Feb-28

15.54

15.43

(0.01)

12.15 18-Jul-34

15.57

15.20

(0.01)

12.40 18-Mar-36

15.41

15.23

0.06

16.2499 18-Apr-37

15.27

15.14

0.00

Source: Zedcrest Dealing Desk 

 

Treasury Bills

The T-bills market maintained a slightly bullish posture, with yields moderating further by c.5bps on average. This came on the back of inflows from FAAC payments which bolstered system liquidty considerably, with the most interests from market players seen on the Jan – March maturities.

 

We expect the market to trade on a relatively calmer note in tomorrow’s session, as market players position for the NTB auction, where the CBN intends to rollover a total of c.N145bn in NTB maturities. Rates are expected to clear considerably higher, especially on the 364-day, due to the double hike  in OMO stop rates from the last NTB auction.

 

PMA Expectations – 31 October 2018

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

9.54

11.00 - 11.20

10.96

182 days

47.71

12.70 - 12.90

12.69

364 days

88.04

14.00 - 14.20

13.45

Source: Zedcrest Research

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

12.90

12.55

(0.10)

3-Jan-19

12.90

12.55

(0.35)

14-Feb-19

12.90

12.75

(0.15)

14-Mar-19

12.85

12.65

(0.15)

4-Apr-19

12.95

12.70

0.20

18-Jul-19

13.10

12.55

0.00

1-Aug-19

13.70

13.50

0.00

12-Sep-19

14.15

14.10

(0.20)

3-Oct-19

14.35

14.15

(0.15)

Source: Zedcrest Dealing Desk

 

 

Money Market

In line with our expectations, the OBB and OVN rates moderated by c.5pct to 9.50% and 10.33% respectively. This came on the back of inflows from FAAC payments (c.N382bn), estimated to have bolstered system liquidity to c.N490bn from c.N110bn opening today.

 

We expect rates to remain relatively stable tomorrow, as there are no significant outflows expected.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.50

14.83

Overnight (O/N)

10.33

15.50

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained stable at N306.60/$ (spot) and N362.82/$ (SMIS). At the I&E FX window, the NAFEX closing rate appreciated further by c.0.07% to N363.32/$ from N363.58/$ previously.  Rates were however unchanged at the parallel market segment, with the cash and transfer rates closing at N361.00/$ and N364.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.60

306.60

CBN SMIS

362.82

362.82

I&E FX Window

363.32

363.58

Cash Market

361.00

361.00

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Sovereigns weakened in today’s session, with yields trending higher by c.7bps. The weakest bonds on the day were the 2038s and 2047s which lost c.0.80pp.

               

The NGERIA Corps were slightly bullish, with interests seen on the DIAMBK 19s, ACCESS 21s Snr and UBANL 22s. We however saw better sellers on the FBNNL 21s.

 

 

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 

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