Bonds & Fixed Income | |
Bonds & Fixed Income | |
3818 VIEWS | |
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Monday, March 04, 2019 11:58 AM / Zedcrest Capital
***Oil Rises
Amid Nigerian Oil Terminal Shutdown***
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 15th
Consecutive Time at the Jan. 22, 2019 MPC Meeting |
External Reserves |
$42.32bn |
As at March 1, 2019. A c.0.02% increase
from $42.31bn on February 27, 2019 |
Brent Crude |
$66.14pb |
As at March 4, 2019. A c.1.05% increase from $65.45pb
on March 1, 2019 |
Bonds
The
FGN Bond Market traded on a mixed note, with yields compressing on the shorter
end of the curve, in tune with decline in long tenor T-bill Yields. Offers
however improved slightly on the mid to long end of the curve, as buying
interests slowed from the tempo in the previous week.
We
expect the market to remain largely order driven in the near term, with local
players more likely to sustain profit taking at current levels.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.47 |
13.94 |
(0.52) |
16.39 27-Jan-22 |
14.41 |
14.20 |
(0.62) |
12.75 27-Apr-23 |
14.53 |
14.11 |
0.00 |
14.20 14-Mar-24 |
14.10 |
13.87 |
0.19 |
13.53 23-Mar-25 |
14.32 |
14.07 |
0.00 |
12.50 22-Jan-26 |
14.26 |
13.99 |
(0.01) |
16.29 17-Mar-27 |
14.29 |
14.11 |
0.06 |
13.98 23-Feb-28 |
14.23 |
14.00 |
0.10 |
12.15 18-Jul-34 |
14.15 |
13.84 |
0.02 |
12.40 18-Mar-36 |
14.16 |
14.10 |
(0.13) |
16.2499 18-Apr-37 |
14.15 |
13.95 |
0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
T-bill Yields trended slightly higher in today’s
session on the back of the renewed OMO sale by the CBN which further compressed
system liquidity levels. The longer end of the curve however remain depressed,
falling lower by c.20bps, as absence of a long tenor OMO offering by the CBN
fueled continued demand in the market for the long tenor bills.
Despite the absence of a long tenor offering, the OMO
auction by the CBN was 1.13X oversubcribed on the 200bn offered. Demand was
however skewed to the 192-day bills (N156.18bn sub.) which recorded a total
sale of N113.20bn, with stop rate cut by 2bps to 13.48%. The CBN however sold
the full subscriptions (N70.84bn) on the 94-day bill, with the stop rate held
at 11.90%.
We expect the market to trade on a relatively flat note
tomorrow, except for sustained demand expected on the longer end of the curve.
Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14-Mar-19 |
10.00 |
8.50 |
1.00 |
4-Apr-19 |
11.00 |
5.00 |
0.00 |
2-May-19 |
11.00 |
8.65 |
0.20 |
13-Jun-19 |
11.90 |
5.00 |
1.90 |
18-Jul-19 |
12.50 |
12.25 |
0.30 |
1-Aug-19 |
12.00 |
10.00 |
(0.25) |
12-Sep-19 |
13.50 |
13.00 |
0.05 |
3-Oct-19 |
13.50 |
13.25 |
0.00 |
14-Nov-19 |
13.50 |
13.15 |
0.10 |
5-Dec-19 |
13.45 |
13.25 |
(0.30) |
2-Jan-20 |
13.50 |
13.25 |
0.00 |
6-Feb-20 |
13.10 |
12.90 |
(0.40) |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market trended lower by c.2pct, despite the OMO and wholesale FX
intervention by the CBN. The moderation in rates was majorly due to the inflows
from FAAC on Friday and a significant boost to naira liquidity following heavy
FX purchases by the CBN in the I&E FX window on Friday where the market
turnover hit an all-time high of $1.8bn. The OBB and OVN rates consequently
ended the session at 14.00% and 14.92% respectively.
We
expect rates to remain relatively stable tomorrow, barring a further OMO sale
by the CBN.
Money
Market Rates |
||
|
Current
(%) |
Previous
(%) |
Open
Buy Back (OBB) |
14.00 |
16.33 |
Overnight
(O/N) |
14.92 |
17.42 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rates closed
the session at N306.85/$ (Spot) and N356.92/$ (SMIS). The NAFEX rate in the
I&E window appreciated marginally to N360.98/$. At the parallel market, the
cash rate remained unchanged at N358.00/$, while the transfer rate appreciated
to N364.50/$.
FX
Market |
||
|
Current
(N/$) |
Previous
( N/$) |
CBN
Spot |
306.90 |
306.85 |
CBN
SMIS |
356.92 |
356.97 |
I&E
FX Window |
360.98 |
361.03 |
Cash
Market |
358.00 |
358.00 |
Transfer
Market |
364.50 |
365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
Investors’ interests remained
weak on the NGERIA Sovereigns, with yields
marginally lower by c.1bp on the day. This was following slight sell witnessed
mostly on the longer end of the curve.
In the NGERIA Corps, we witnessed firm interests for the FIDBAN 22s and
SEPLLN 23s, while investors remained slightly bearish on the ACCESS 21s Subs.
Related News
1. March 2019 FGN
Savings Bonds Offer For Subscription
2. Money Market
Rate Increased As Overnight Rate Fell To 17.42%
3. Bond Yields
Retreat Following Slight Profit Taking on 10-Year
4. NSE Organises
Fixed Income Trading Workshop to Enhance Capacity of Dealing Members
5. First SEC Approved
15-Year Corporate Green Infrastructure Bond in the Nigerian Debt Capital
Markets
6. CBN Cuts 1yr OMO
rate by 70bps following N1.2trn Demand
7. Post -Election:
Where Are Fixed Income Yields Headed?
8. I and E Market
Turnover Hits All time High of $1.2bn as FPIs fuel Rally on T-bills
9. Absence of CBN
OMO Fuels Rally on Long Tenor Bills
10. Coupon Payments
Bolster Demand on 10-year FGN Bond
11. Bullish
Sentiment Resurfaces as Average Yield Retreat to 14.2%