Funding Rates decline on FAAC Expectations

Proshare

Monday, February 26, 2018/ 07.50 PM/Zedcrest Capital

** FG, World Bank in discussion for $1bn power loan***

KEY INDICATORS

Inflation

15.13%

Declined by 0.24% in January from 15.37% in December 2017

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting of November 2017

External Reserves

$41.82billion

Accreted 1.70% as at 21 February from $41.77bn as at 20 February 2018

Brent Crude

$66.93pb

Rose by 0.09% from $66.87pb on 22 February 2018


Bonds
The bond market opened the week on a quiet note, with only few trades executed on some maturities. Yields rose by c.6bps on average, due to slight sell on the 2020 and 2036 bonds especially. We expect renewed buy sentiments in the bond space tomorrow, on the back of increased liquidity inflows from FAAC allocations.

 

Benchmark FGN Bond Yields

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

0.00

0.00

0.00

15.54 13-Feb-20

0.14

0.14

0.14

14.50 15-Jul-21

0.07

0.07

0.07

16.39 27-Jan-22

0.06

0.06

0.06

14.20 14-Mar-24

0.05

0.05

0.05

12.50 22-Jan-26

0.04

0.04

0.04

16.29 17-Mar-27

0.03

0.03

0.03

12.15 18-Jul-34

0.05

0.05

0.05

12.40 18-Mar-36

0.06

0.06

0.06

16.25 18-Apr-37

0.06

0.06

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Source: Zedcrest Dealing Desk 

Treasury Bills

The T-bills market also traded on a quiet note with slight decline of c.4bps in average yields. This came as the CBN held off on its regular OMO auction, whilst conducting its usual FX interventions in the wholesale, SMEs and invisibles segments of the FX market. Anticipated inflows from FAAC and Retail FX refunds are expected to fuel bullish sentiments in the market tomorrow. 

 

Benchmark Treasury Bills Rates

Description

Bid (%)

Offer (%)

Day Change (%)

12-Apr-18

14.55

14.40

0.15

3-May-18

14.55

14.40

(0.20)

14-Jun-18

14.00

13.85

(0.20)

5-Jul-18

14.25

14.10

0.00

2-Aug-18

14.45

13.45

0.10

13-Sep-18

14.30

14.15

0.00

4-Oct-18

14.30

14.15

(0.15)

1-Nov-18

14.10

13.95

0.00

3-Jan-19

13.45

13.30

(0.05)

14-Feb-19

13.50

13.35

0.00

Source: Zedcrest Dealing Desk

Money Market

The OBB and OVN rates fell to 7.92% and 8.83% respectively. This came on the backdrop of expectations of increased liquidity inflows from FAAC and retail FX refunds. System liquidity is however estimated to close at c.58bn long owing to outflows for the Wholesale FX interventions by the CBN. We expect rates to trend downwards tomorrow, as the inflows from FAAC (c.N305bn) and retail refunds hit the system.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

7.92

11.50

Overnight (O/N)

8.83

12.42

 

 

 

 

 


Source: FMDQ, Zedcrest Research

FX Market

The CBN Official spot rate remained stable at its previous rate of N305.95/$. This is following its intervention to the Tune of $210m in the wholesale, SME and Invisibles segment of the market.

The spot rate in the Investors and Exporters’ FX Window appreciated by 0.14% to close at N360.19/$ from N360.70/$ in the previous session.

Rates in the Unofficial market however depreciated by 0.06% to N361.00/$, from its previous rate of N360.80/$. 

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.95

305.95

CBN SMIS

330.00

330.00

I&E FX Window

360.19

360.70

Parallel Market

361.00

360.80

Source: CBN, FMDQ, REXEL BDC


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