I and E Market Turnover Hits All time High of $1.2bn as FPIs fuel Rally on T-bills

Proshare

 Thursday, February 27, 2019  06:30 AM / Zedcrest Capital

*** FGN Bonds Trade to Sub-14% in Post-Election rally***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.37%

As at February 15, 2019. A c.7bps decline from 11.44% recorded in December 2018

MPR

14.00%

Left Unchanged for the 15thConsecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$42.33bn

As at February 23, 2019. A c.0.12% decrease from $42.38bn on February 22, 2019

Brent Crude

$66.81pb

As at February 27, 2019. A c.2.28% increase from $65.32pb on February 26, 2019

 

Bonds

The FGN Bond market opened the day on a firmly bullish note, with significant buying witnessed especially on the mid to long end of the curve, following the final announcement of the presidential election results. Yields on the 2027s and 2034s consequently broke the 14% support level, to trade at a low of 13.91% and 13.81% respectively. Yields however retreated slightly towards the end of the session, to close at c.10bps lower on the day.

 

We expect demand interests to persist, but on a less aggressive note as market players seem to view support for bonds at c.14%.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.84

14.02

(0.10)

16.39 27-Jan-22

14.72

14.21

0.00

14.20 14-Mar-24

14.40

14.17

(0.05)

12.50 22-Jan-26

14.48

14.37

(0.03)

16.29 17-Mar-27

14.34

14.04

(0.21)

13.98 23-Feb-28

14.40

14.30

(0.17)

12.15 18-Jul-34

14.40

14.02

(0.12)

12.40 18-Mar-36

14.40

14.01

(0.10)

16.2499 18-Apr-37

14.23

14.02

(0.16)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market rallied further by c.50bps in today’s session, with continued buying interest witnessed especially on the long end of the curve which traded as low as 14% during the sesssion. In line with our expectations, the NTB auction by the CBN was signifcantly oversubcribed by c.632%, with the most demand on the 364-day which was 11.75X oversubscribed. Stop rates consequently cleared by c.35bps lower from their previous auction levels at 10.90% (-7bps), 13.01% (-39bps) and 14.37% (-58bps) on the 91, 182 and 364-day bills respectively.

Given the signifanct level of  demand at today’s NTB auction, we expect market sentiments to remain firmly bullish, as market players anticipate a renewed OMO offering by the CBN tomorrow.

 

NTB Auction Result

Tenor

Rate (%)

Offer (bn)

Sub ('bn)

Sale ('bn)

91-days

10.90

24.37

40.55

24.37

182-days

13.01

38.75

75.82

38.75

364-days

14.37

51.99

610.98

51.99

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

10.50

5.00

1.00

4-Apr-19

11.50

5.00

0.00

2-May-19

10.50

10.25

(1.50)

13-Jun-19

10.00

5.00

(2.10)

18-Jul-19

12.40

12.00

(0.35)

1-Aug-19

12.30

12.05

(0.50)

12-Sep-19

13.50

12.75

(0.50)

3-Oct-19

13.90

13.60

(0.65)

14-Nov-19

14.35

14.15

(0.30)

5-Dec-19

14.25

14.00

(0.45)

2-Jan-20

14.50

14.10

(0.25)

6-Feb-20

14.50

14.00

(0.15)

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market declined further by c.4pct as system liquidity improved slightly to c.N140bn. The OBB and OVN rates consequently ended the session at 9.50% and 10.58% respectively.

We expect rates to trend lower tomorrow due to expected inflows from OMO maturities, c.N350bn.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.50

13.79

Overnight (O/N)

10.58

14.71

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, rates remained unchanged at N306.85/$ (Spot) and N356.97/$ (SMIS). The NAFEX rate in the I&E window appreciated by 0.09% to N361.18/$ as market turnover hit an all-time high of c.$1.2bn following increased FPI inflows into the market. At the parallel market, the cash and transfer rates depreciated by 0.06% and 0.14% at N358.00/$ and N366.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.85

CBN SMIS

356.97

356.97

I&E FX Window

361.18

361.50

Cash Market

358.00

357.80

Transfer Market

366.00

365.50

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Sovereigns maintained a bullish run fuelled by a successful declaration of the Nigerian election results. Yields which trended significantly higher at the open of the session however retreated slightly, with yields closing lower by c.10bps on the day.

 

In the NGERIA Corps, we witnessed slight interests on the ZENITH 22s, FIDBAN 22s and SEPLLN 23s.

 

Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

 

 

 

Related News

 

1.       Absence of CBN OMO Fuels Rally on Long Tenor Bills

2.      Coupon Payments Bolster Demand on 10-year FGN Bond

3.      Bullish Sentiment Resurfaces as Average Yield Retreat to 14.2%

4.      Money Market Rate Increased As Overnight Rate Rose to 20.25%

5.      Investors Remain Bullish on FGN Bonds Ahead of Elections

6.      FMDQ Admits Mixta Real Estate (Nigeria) PLC Bonds and Commercial Papers

7.      Market Players Oversubscribe 1-year CBN OMO bill by 181%

8.     Summary of February 2019 FGN Bond Auction Results

9.      February 2019 FGN Bond Auction Oversubscribed

10.  Market Players Oversubscribe FGN Bond Auction by 156%

11.   T-bill Yields Compress as Funding Pressures Ease

12.  CBN Avoids OMO Sale, as System Liquidity Dips to Negative

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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