I and E Turnover Rebounds to c.$700m as CBN Re-Issues Long Tenor OMO Bill

Proshare

Friday, March 22, 2019 06:15 AM / Zedcrest Capital

***Nigeria's Central Bank Sees Tight Monetary Policies Continuing*** - Bloomberg

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.31%

As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019

MPR

14.00%

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

External Reserves

$43.51bn

As at March 20, 2019. A c.0.23% increase from $43.41bn on March 19, 2019

Brent Crude

$67.60pb

As at March 21, 2019. A c.0.21% decrease from $67.74pb on March 20, 2019

 

Bonds

The FGN Bond market traded on a relatively flat note, with yields marginally higher by c.2bps on the day. We however witnessed slight offshore interest on the 2028s which was the most actively traded bond during the session, with yields lower by c.10bps on the ticker.

 

We maintain a slightly bearish stance on the market, in view of the forthcoming FGN bond auction and reissuance of a long tenor OMO bill (14.90% eff. yield) by the CBN.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.63

14.21

(0.18)

16.39 27-Jan-22

14.42

14.27

(0.08)

12.75 27-Apr-23

14.71

14.40

0.21

14.20 14-Mar-24

14.49

13.98

0.09

13.53 23-Mar-25

14.53

14.38

0.00

12.50 22-Jan-26

14.55

14.33

0.11

16.29 17-Mar-27

14.50

14.26

0.04

13.98 23-Feb-28

14.30

14.23

(0.10)

12.15 18-Jul-34

14.43

14.19

0.04

12.40 18-Mar-36

14.39

14.12

0.09

16.2499 18-Apr-37

14.26

14.14

(0.03)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

Yields in the T-bills market repriced higher by c.30bps as the CBN surprised the market with the re-issuance of a long tenor OMO bill in addition to its short and mid tenor offerings. The Auction was oversubscribed by c.238%, with the CBN eventually selling a total of c.N293bn of the N100bn offered. Stop rates were left unchanged on the 91-day bill while they declined significantly to 12.98% and 13.04% on the 182-day and 350-day bills respectively.

We expect the market to be largely driven by demand interests from lost out bids at today’s OMO auction. Barring a renewed OMO auction by the CBN, the market should trade on a slightly bullish note tomorrow.

 


OMO Auction Result

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

91 day

11.80

30.00

15.04

15.04

182 day

12.98

70.00

79.47

49.95

350 day

13.04

100.00

381.95

228.39

Source: CBN

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

4-Apr-19

12.00

10.00

0.00

2-May-19

11.00

9.00

0.00

13-Jun-19

12.00

11.50

0.30

18-Jul-19

12.50

12.00

0.25

1-Aug-19

13.00

11.90

0.50

12-Sep-19

13.30

13.15

0.15

3-Oct-19

13.20

13.05

0.10

14-Nov-19

13.20

13.05

0.10

5-Dec-19

13.30

12.85

0.15

2-Jan-20

13.15

12.80

0.10

6-Feb-20

13.20

12.60

0.40

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market trended higher by c.6pct as the OMO auction by the CBN took system liquidity to an estimated negative position of c.N117bn from c.N176bn positive levels opening the day. The OBB and OVN rates consequently ended the session at 16.00% and 17.25% respectively.

We expect rates to remain elevated tomorrow, as there are no significant inflows anticipated.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

16.00

10.17

Overnight (O/N)

17.25

11.17

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N305.90/$ (Spot) and N356.92/$ (SMIS). The NAFEX closing rate in the I&E window weakened slightly by 0.02% to N360.47/$, whilst the market turnover rebounded strongly to c.$700m due to renewed FPI inflows chasing the OMO offering by the CBN. The cash and transfer rates at the parallel market however remained unchanged at N357.80/$ and N364.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

356.92

356.92

I&E FX Window

360.47

360.40

Cash Market

357.80

357.80

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns rebounded strongly following the slightly more dovish stance by the US FOMC. Yields were consequently lower by c.7bps on the day, with the strongest gains witnessed on the mid to long end of the curve

 

In the NGERIA Corps, we witnessed slight interests on the Access 21s Sub and FIDBAN 22s.

 

Proshare Nigeria Pvt. Ltd.


 

 Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.

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