Funding Rates Remain Elevated as CBN Mops Up OMO Maturities

Proshare

Thursday, January 10, 2018/ 07:10PM / Zedcrest Capital


***FG Got 132b Naira of Orders for 100b Naira 7-Year Sukuk*** - DMO

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

$43.05bn

As at January 7, 2018. A c.0.02% increase from $43.04bn on January 3, 2018

Brent Crude

$61.12pb

As at January 10, 2019. A c.1.71% increase from $60.09pb on January 9, 2018

 

Bonds

The Bond market traded on a relatively quiet note, with yields relatively unchanged on the day. We have however begun to see better sellers across the curve and we expect yields to resume an uptrend shortly as market players anticipate release of the Q1 FGN Bond calendar by the DMO.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.98

14.78

(0.05)

14.50 15-Jul-21

15.52

15.27

0.01

16.39 27-Jan-22

15.09

14.89

0.00

14.20 14-Mar-24

15.10

14.87

0.00

12.50 22-Jan-26

15.60

15.49

0.03

16.29 17-Mar-27

15.44

15.39

(0.06)

13.98 23-Feb-28

15.53

15.45

0.00

12.15 18-Jul-34

15.49

15.37

(0.01)

12.40 18-Mar-36

15.50

15.31

(0.03)

16.2499 18-Apr-37

15.39

15.30

(0.01)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a slightly bearish note, with yields marginally higher on the back of the c.N343bn OMO sale by the CBN which mopped up most of the c.N375bn OMO maturities. The most selloffs were on the Shorter end of the curve (Jan – Mar), while yields inched higher on the longer end in response to the new 364-day OMO offering.

We expect yields to remain elevated as the current tight system liquidity levels are expected to constrain buying interests in the market, whilst a further OMO auction would cause yields to trend higher.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

15.00

14.00

(0.50)

14-Mar-19

15.00

14.00

0.00

4-Apr-19

14.00

12.80

0.50

2-May-19

14.30

13.20

0.55

13-Jun-19

13.60

13.30

(0.05)

18-Jul-19

14.00

13.30

0.35

1-Aug-19

14.00

13.65

0.10

12-Sep-19

15.00

14.70

0.05

3-Oct-19

15.05

14.80

0.10

14-Nov-19

14.95

14.70

0.00

5-Dec-19

15.10

14.85

0.10

Source: Zedcrest Dealing Desk

 

 

 

Money Market

Rates in the money market declined marginally by c.3pct, with the OBB and OVN rates closing the day at 22.67% and 24.67%, as the c.N375bn inflows from OMO T-bills maturities were mopped up by a c.N343bn OMO sale by the CBN. System liquidity consequently improved marginally to c.N66bn negative.

We expect rates to remain elevated as system liquidity remains in Negative territory, with the possibility for a further OMO sale by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

22.67

26.67

Overnight (O/N)

24.67

27.67

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.90/$ (spot) and N358.13/$ (SMIS). The NAFEX rate in the I&E window depreciated by c.0.06% to N365.12/$ from N364.90/$ previously. At the parallel market, the cash rate depreciated by c.0.14% to N361.00/$ while the transfer rate remained unchanged N365.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

358.31

358.31

I&E FX Window

365.12

364.90

Cash Market

361.00

360.50

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were relatively flat in today’s session, with yields inching higher by 3bps following slight sell on the longer end of the curve.

 

The NGERIA Corps were relatively quiet except for slight interests on the Access and FBNNL 21s.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

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 Proshare Nigeria Pvt. Ltd.

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