Funding rates Spike as CBN Mops up Excess System Liquidity

Proshare

Saturday, March 24, 2018 /6:00 AM / Zedcrest Capital

Funding rates Spike as CBN Mops up Excess System Liquidity

***Nigeria States' Internally Generated Revenue Climbs 12% in 2017***
 

KEY INDICATORS

Inflation

14.33%

Declined by 0.80% in February from 15.13% in January 2018

MPR

14.00%

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

External Reserves

$45.36billion

Accreted 1.54% as at 22 March from $45.20bn as at 21 March 2018

Brent Crude

$69.45pb

Rose by 1.17% from $68.65pb on 22 March 2018

 

Bonds

The bond market remained bearish in today’s session with slight sell especially on the 2027s taking yields higher by c.6bps for the second consecutive trading session. We however witnessed some resistance when yields began to hit the 13.60% area, with slight retracements on the 27s and 37s before the close of trading. We expect this bearish trend to persist however, as demand for bonds remain relatively weak in the market, with most support seen from offshore buyers.

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

13.71

13.64

0.08

15.54 13-Feb-20

13.56

13.49

0.03

14.50 15-Jul-21

13.59

13.52

0.04

16.39 27-Jan-22

13.59

13.52

0.13

14.20 14-Mar-24

13.56

13.49

0.05

12.50 22-Jan-26

13.69

13.62

0.12

16.29 17-Mar-27

13.63

13.56

0.06

12.15 18-Jul-34

13.53

13.46

0.00

12.40 18-Mar-36

13.46

13.39

0.05

16.25 18-Apr-37

13.36

13.29

0.02


Source: Zedcrest Dealing Desk

Treasury Bills

The T-bills Market traded on a relatively quiet note, with very little in the way of flows, as the CBN resumed its OMO auction, selling a total of c.N248bn of the 22-Nov bill. Yields consequently stayed flat, compressing just slightly by 1bp on average. We expect renewed buy sentiments in the coming week, as market players anticipate significant fund inflows from retail FX refunds and FAAC and OMO T-bill maturities later in the week. The CBN is however expected to increase its OMO auction tempo, to calm liquidity pressures in the system.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Apr-18

13.75

13.60

0.00

3-May-18

14.35

14.20

0.00

14-Jun-18

14.15

14.00

0.00

5-Jul-18

14.20

14.05

0.00

2-Aug-18

14.05

13.45

0.00

13-Sep-18

14.05

13.90

0.00

4-Oct-18

14.20

14.05

0.00

1-Nov-18

14.35

14.20

0.00

3-Jan-19

13.35

13.20

0.00

14-Feb-19

13.25

13.10

0.00

Source: Zedcrest Dealing Desk

OMO  - 23 March 2018

Tenor

Rate (%)

Offer (NBn)

Sub (N'bn)

Sale (N'bn)

97 days

12.60

50.00

0.037

0.037

244 days

14.40

150.00

247.72

247.72

Source: CBN

Money Market

The OBB and OVN rates spiked by c.14 percent points back to their previous day levels, closing at 20.83% and 23.17% respectively. This came on the backdrop of a significant OMO sale by the CBN c.N248bn and debits for bond auction settlement c.64bn. System liquidity is consequently estimated to close at c.N60bn long, from a positive opening figure of c.N370bn. We expect rates to remain elevated on Monday, due to expected outflows for OMO and wholesale FX sales by the CBN.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

20.83

6.83

Overnight (O/N)

23.17

8.08

Source: FMDQ, Zedcrest Researc h

 

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 1.54% to $45.36bn as of 21 March. The NAFEX rate appreciated by 0.03% to N360.00/$, with total volume traded rising by 66% to $259m. Rates in the Unofficial market however depreciated by 0.03% to N361.20/$.

 

FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.70

305.70

CBN SMIS

330.00

330.00

I&E FX Window

360.00

360.12

Parallel Market

361.20

361.10

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA Sovereigns turned bearish in today’s session, reversing gains witnessed in the previous session. Yields rose by c.6bps on average with some selloffs especially on the 15– and 30-yr. Prices were also down by –0.3pts with the 47s losing as much as –0.6pts, as the 18s, 27s and 47s edged closer to par.

 

The Nigerian Banks were largely bearish on all tickers except, except for the FIBAN 18s which retraced slightly from selloffs witnessed in previous sessions. Investors were mostly bearish on the Access 21s Senior and the UBANL and FIDBAN 22s. The SEPLLN 23s was last traded at 99.75.

Contact us:

Dealing Desk: 01-6311667   Dayo: 07032208237         Seyi: 08023231396            Nnamdi: +2348133385000   

Email: research@zedcrestcapital.com

Disclaimer:

Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment research or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.

READ MORE:
Related News
SCROLL TO TOP