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

Proshare

Friday, February 22,  2019  07:00AM / Zedcrest Capital 


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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

$42.62bn

As at February 19, 2019. A c.0.16% decrease from $42.69bn on February 18, 2019

Brent Crude

$66.83pb

As at February 21, 2019. A c.0.51% decrease from $67.17pb on February 20, 2019

 

Bonds

Despite the significant sale on the 10-yr bond at the previous day’s auction, market players remained well bid on the 2028s which compressed by c.10bps from its clearing rate of 14.93% at the auction. Yields were however marginally higher by c.5bps on the day, as offers improve markedly from their levels in the previous session.

 

We expect market players to remain well bid in tomorrow’s session, with c.N49bn Coupons on the 2028s (to be paid Monday) expected to sustain demand for the bond.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.99

14.58

(0.08)

16.39 27-Jan-22

14.86

14.77

0.23

14.20 14-Mar-24

14.65

14.48

0.06

12.50 22-Jan-26

14.78

14.53

0.01

16.29 17-Mar-27

14.79

14.58

(0.01)

13.98 23-Feb-28

14.83

14.59

(0.01)

12.15 18-Jul-34

14.60

14.35

0.00

12.40 18-Mar-36

14.57

14.20

0.02

16.2499 18-Apr-37

14.44

14.10

(0.01)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded with mixed sentiments in today’s session, with slight demand on some short and mid tenors offset by a slight uptick on the longer end of the curve, which was due to the renewed OMO offer by the CBN.

Market players bided aggressively for the 1-yr OMO bill offered, with total subscriptions of c.N725bn of the N400bn offered. The CBN consequently prorated its sale on the 1yr by c.86%, resulting in a total sale of c.N627bn, whilst subscriptions on other tenors (c.N61bn) were fully sold with rates maintained at previous levels.

We expect demand to be sustained on the long end of the curve due to the amount of unfilled bids at today’s auction. The short end should however trend slightly bearish on the back of the system liquidity squeeze from today’s OMO Sale. 


OMO Auction Result

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

98 day

11.90

50.00

7.91

7.91

189 day

13.50

100.00

53.06

53.06

364 day

15.00

400.00

725.61

627.22

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

10.00

8.50

0.05

4-Apr-19

12.00

11.20

(1.00)

2-May-19

12.00

11.00

(0.15)

13-Jun-19

11.95

10.75

(0.05)

18-Jul-19

12.65

12.40

0.05

1-Aug-19

13.00

12.35

0.10

12-Sep-19

14.10

14.00

(0.10)

3-Oct-19

14.70

14.55

0.00

14-Nov-19

14.90

14.70

0.00

5-Dec-19

14.95

14.80

0.00

2-Jan-20

14.95

14.80

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market moderated slightly, as market players anticipated inflows from OMO T-bill maturities (c.N580bn). System liquidity however ended the session significantly lower at c.N140bn negative, as the CBN mopped up all system liquidity via a c.N688bn OMO Sale.

We consequently expect stop rates to trend higher tomorrow, in response to the significant squeeze in system liquidity.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.00

15.00

Overnight (O/N)

15.50

15.83

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained stable at N306.80/$(Spot) and N356.97/$(SMIS). The NAFEX rate in the I&E window appreciated further by c.0.15% to N361.48/$. At the parallel market, the cash rate appreciated marginally by 0.03% to N358.20/$, while the transfer rate depreciated further by 0.14% to N366.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.80

306.80

CBN SMIS

356.97

356.97

I&E FX Window

361.48

362.04

Cash Market

358.20

358.30

Transfer Market

366.00

365.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns opened the session on a firmly bullish note, but moderated slightly towards the end of the session, with yields closing lower by c.5bps on the day, as oil prices retreated from its previous day’s high.

 

In the NGERIA Corps, we witnessed slight sell on the ACCESS 21s Snr.

 

 

Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd.

 

 

Related News

1.       Summary of February 2019 FGN Bond Auction Results

2.      February 2019 FGN Bond Auction Oversubscribed

3.      Market Players Oversubscribe FGN Bond Auction by 156%

4.      T-bill Yields Compress as Funding Pressures Ease

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

6.      Average Yields on T-Bills Close at 14.9% on Sustained Sell-offs

7.      Money Market Rate Decreased As Overnight Rate Fell To 17.50%

8.     Market Players Rally FGN Bonds in Final Pre-election Bets

9.      CBN OMO Repayment Moderates Funding Rates

10.  Invest in FGN Monthly Bond Auction – February 2019

11.   Market Players Oversubscribe NTB Auction by 286%

12.  CBN Holds Off on OMO Sale as Funding Rates Moderate


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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