Market Players Oversubscribe FGN Bond Auction by 156%

Proshare

Thursday, February 21,  2019  07:45 AM / Zedcrest Capital 

***Banks’ Capital Adequacy Ratios Rise to 15.26%*** - Aishah Ahmad

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

$42.69bn

As at February 19, 2019. A c.0.12% decrease from $42.74bn on February 18, 2019

Brent Crude

$67.17pb

As at February 20, 2019. A c.1.90% increase from $65.92pb on February 19, 2019


 

Bonds

The Bond Market traded on a relatively flat note, with yields slightly higher by c.2bps, as market players anticipated results from the Auction by the DMO.  The Auction by the DMO was oversubscribed by c.156%, with demand heavily skewed to the 2028s, which made up c.84% of the total subscriptions of c.N234bn. The DMO consequently sold the total offered amount of N150bn with stop rates clearing at c.52bps below their previous levels at 14.52%, 14.80% and 14.94% on the 2023s, 2025s and 2028s respectively.

 

The 2028s cleared slightly above market expectation given the increased sale (c.N136bn) on the maturity. Given the robust supply of bonds at the auction, we expect market players to be better offered at tomorrow’s session. 


FGN Bond Auction Result

Maturity

Rate (%)

Offer ('bn)

Sub ('bn)

Sale (bn)

Apr-23

14.52

50.00

9.52

1.50

Mar-25

14.80

50.00

28.85

12.25

Feb-28

14.94

50.00

195.98

136.25

Source: DMO

 

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 remained slightly bullish, with sustained demand by clients on the longer end of the curve, in absence of an OMO auction by the CBN. Yields were consequently lower by c.10bps on the day.

We expect yields to retrace upwards tomorrow, with the CBN expected to intervene with a sizeable OMO auction to mop up the c.N580bn inflows expected from OMO maturities.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

9.95

8.00

0.95

4-Apr-19

13.00

11.75

(0.25)

2-May-19

12.15

11.00

(0.65)

13-Jun-19

12.00

10.75

(1.00)

18-Jul-19

12.60

12.40

(0.40)

1-Aug-19

12.90

12.35

(0.10)

12-Sep-19

14.20

14.00

(0.15)

3-Oct-19

14.70

14.65

(0.15)

14-Nov-19

14.90

14.70

(0.05)

5-Dec-19

14.95

14.85

0.00

2-Jan-20

14.95

14.85

0.05

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market remained stable at c.15%, as there were no significant outflows from the system.

We expect the funding rates to trend lower tomorrow, due to the expected inflows from OMO T-bill maturities.

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/$ at the spot market, while the CBN strengthened the SMIS rate by 0.04% to N356.97/$. The NAFEX rate in the I&E window appreciated by c.0.04% to N362.04/$, as market turnover hit a one month high of c.$545m on the back of increased FPI inflows. At the parallel market, the cash rate appreciated by 0.06% to N358.30/$, while the transfer rate depreciated by 0.14% to N365.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.80

306.80

CBN SMIS

356.97

357.10

I&E FX Window

362.04

362.20

Cash Market

358.30

358.50

Transfer Market

365.50

365.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

In the NGERIA Sovereigns, prices were significantly higher, with yields trending lower by c.16bps as a continued uptrend in oil prices (now above $67pb) bolstered investors’ interests for the bonds.

 

In the NGERIA Corps, we witnessed slight sell on the DIAMBK 19s and FIDBAN 22s.


Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.


 

Related News

1.       T-bill Yields Compress as Funding Pressures Ease

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

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

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

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

6.      CBN OMO Repayment Moderates Funding Rates

7.      Invest in FGN Monthly Bond Auction – February 2019

8.     Market Players Oversubscribe NTB Auction by 286%

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

10.  Funding Rates Spike to YTD High as CBN Drains System Liquidity into Negative


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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