Inflows from Paris Club Refunds Bolster System Liquidity amid SMIS Outflows

Proshare

Sunday, September 28, 2018/ 10.08AM / Zedcrest Capital


***Decision on minimum wage will be taken on Monday*** - Ngige

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at October16, 2018,5bps up from 11.23% recorded in August 2018.

MPR

14.00%

Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting

External Reserves

$42.34bn

As atOctober25, 2018. A c.0.17% decrease from $42.41bnon October24, 2018

Brent Crude

$77.28pb

As at October 26, 2018. A c.0.80% increasefrom$76.67pbon October 25, 2018

 

 

Bonds

The bond market was just a touch bearish in today’s session, with yields marginally higher by c.1bp on the day, following slight sell on the 24s and 27s. Yields were however higher by c.12bps w/w, mostly due to the bearish sentiments that followed the OMO rate hike by the CBN on Thursday.

 

In the coming week, we expect interest from local clients to keep yields moderated, but with slight bearish pressures still expected to persist.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.43

14.17

(0.09)

14.50 15-Jul-21

15.17

15.03

(0.02)

16.39 27-Jan-22

14.76

14.38

0.03

14.20 14-Mar-24

15.19

15.01

0.03

12.50 22-Jan-26

15.16

15.01

0.04

16.29 17-Mar-27

15.30

15.24

0.09

13.98 23-Feb-28

15.43

15.36

0.01

12.15 18-Jul-34

15.31

15.18

(0.03)

12.40 18-Mar-36

15.29

15.16

0.00

16.2499 18-Apr-37

15.19

15.11

0.00

Source: Zedcrest Dealing Desk 

 

Treasury Bills

The T-bills market reversed losses from yesterday’s session, as market players hunted for yields on the shorter end of the curve, following the signifcant boost in system liquidty from the net OMO credit, retail FX refunds and Paris Club refunds in the previous session. The Longer end of the curve however remained slightly pressured, with yields closing c.20bps lower on the day.

 

Opening next week, we expect the market to remain relatively tempered, with inflows from FAAC payments expected to further bolster system liqudity. We however expect yields to become slightly pressured as market players look forward to the PMA on Wednesday, whilst also expecting a further OMO auction on Thursday, with uncertainties around the current spate of rate hikes by the CBN.

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

13.00

12.70

(1.00)

3-Jan-19

13.00

12.60

(1.00)

14-Feb-19

13.20

12.80

(0.20)

14-Mar-19

13.20

12.90

0.20

4-Apr-19

12.75

12.45

(0.25)

18-Jul-19

13.50

12.50

0.30

1-Aug-19

13.95

13.65

(0.10)

12-Sep-19

14.30

13.95

0.00

3-Oct-19

14.30

13.95

0.15

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates moderated slightly in today’s session to 10.33% and 11.42%, as the market was awash with liquidity from the Retail FX refunds and Paris club payments in the previous session. System liquidity which opened the day at c.587bn positive, is expected to close the week at c.N237bn, due to outflows (c.N350bn est) for a Retail SMIS by the CBN.

 

We expect rates to trend lower opening next week, with inflows from FAAC payments (c.N382bn) expected to further bolster system liquidity.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

10.33

11.50

Overnight (O/N)

11.42

11.93

Source: FMDQ, Zedcrest Research 

 

 

FX Market

At the Interbank, the Naira/USD spot rate remained stable at N306.55/$, while the SMIS rate depreciated by c.0.08% to N362.82/$.At the I&E FX window a total of $118.19mn was traded in 480 deals, with rates ranging between N358.00/$ - N365.00/$. The NAFEX closing rate appreciatedfurtherby c.0.03% toN363.84/$ from N363.95/$ previously.

                                                                     

At the parallel market, the cash and transfer ratesremained unchanged at N361.00/$ and N364.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.55

306.55

CBN SMIS

362.82

362.52

I&E FX Window

363.84

363.95

Cash Market

361.00

361.00

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA Sovereignswere relatively flat on the day, with slight buying interests witnessed on the short end of the curve.Yields were however higher by c.16bps w/w as news of the impending Eurobond issuance ($2.8bn) continued to weigh on sentiments in the market.

               

The NGERIA Corps were mostly flat, except for slight interests seen on the ACCESS 21s Sub and UBANL 22s. 

 

 

 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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