Market Players Anticipate Slightly Higher Rates at N115bn FGN Bond Auction Tomorrow

Proshare

Tuesday, September 23, 2018/ 07.08PM / Zedcrest Capital


***Oil suffers biggest one-day drop in over 3 months***

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

$42.53bn

As atOctober22, 2018. A c.0.14% decrease from $42.72bnon October19, 2018

Brent Crude

$76.80pb

As at October 23, 2018. A c.0.46% decreasefrom$79.78pbon October 22, 2018

 

 

Bonds

The bond market traded flat, with only few trades seen on some mid tenured maturities as market players maintained a slightly short bias ahead of the auction tomorrow.

 

The DMO will offer 115bn of the 5-yr (35bn), 7-yr (35bn) and 10-yr (45bn) bonds at an auction tomorrow. We expect demand at the auction to be moderate, and not as aggressive as that seen at the previous auction. We consequently expect rates to clear slightly above their previous auction levels across the tenors on offer. 

 


FGN Bond Auction Expectations

Tenor

Offer (N'bn)

Expected Stop Rate (%)

Apr -2023

35.00

14.90 - 15.10

Mar-2025

35.00

15.10 - 15.30

Feb-2028

45.00

15.25 - 15.45

 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.18

13.67

(0.01)

14.50 15-Jul-21

15.00

14.70

(0.02)

16.39 27-Jan-22

14.71

14.19

(0.02)

14.20 14-Mar-24

15.13

14.96

0.04

12.50 22-Jan-26

15.07

14.98

0.04

16.29 17-Mar-27

15.16

15.05

0.00

13.98 23-Feb-28

15.34

15.26

0.01

12.15 18-Jul-34

15.33

15.25

0.00

12.40 18-Mar-36

15.30

15.13

0.01

16.2499 18-Apr-37

15.17

15.08

(0.01)

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market reversed gains today, as a squeeze in system liquidty from the wholesale SMIS in the previous session took yields higher by c.15bps across the curve, with the most selloff seen on the shorter end of the curve.

 

We expect yields to remain elevated tomorrow, as market players anticipate a further OMO auction by the CBN on Thursday to mop up inflows from c.N284bn maturing OMO bills.

 


Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Nov-18

13.05

12.60

(0.10)

6-Dec-18

13.00

12.70

0.10

3-Jan-19

13.05

12.70

(0.05)

14-Feb-19

13.05

12.85

0.05

14-Mar-19

12.95

12.60

0.05

4-Apr-19

12.55

12.20

(0.35)

18-Jul-19

12.95

12.50

(0.55)

1-Aug-19

13.45

13.10

(0.25)

12-Sep-19

13.95

13.75

0.15

3-Oct-19

13.85

13.60

0.10

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN ratesmoderated slightly by c.5pct to 15.00% and 15.79% as at close of trading today, while system liquidity compressed significantly to c.N38bn from c.N109bn previously, owing to outflows for the Wholesale SMIS which was funded in the previous session.

 

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

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.00

20.00

Overnight (O/N)

15.79

22.29

Source: FMDQ, Zedcrest Research 

 

 

FX Market

At the Interbank, the Naira/USD rate remained stable N306.55/$ (spot) and N362.52/$ (SMIS).At the I&E FX window a total of $192.03mn was traded in 236 deals, with rates ranging between N358.00/$ - N365.00/$. The NAFEX closing rate appreciatedslightlyby c.0.04% toN363.94/$ from N364.09/$ previously.

                                                                     

At the parallel market, the cash rate and transfer rates remained stable at N361.00/$ and N364.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.55

306.55

CBN SMIS

362.52

362.52

I&E FX Window

363.94

364.09

Cash Market

361.00

361.00

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Sovereigns remained bearish in today’s session, with selloffs seen mostly on the longer tenured bonds. Yields rose by c.6bps across the curve, with the Nov 2047 bond now above the 8.50% mark at 8.54%.

               

The NGERIA Corps were mostly flat, except for slight interests seen on the Access 21s sub and FBNNL 21s and some sell on the DIAMBK 19s.

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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