Market Players Oversubscribe NTB Auction by 286%

Proshare

Thursday, February 14,  2019  08:00 AM / Zedcrest Capital

***NNPC, Total, Shell, NAOC take Final Investment Decision on 4.3trn ANOH gas fields***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.44%

As at January 16, 2019. A c.16bps increase from 11.28% recorded in November 2018

MPR

14.00%

Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$42.89bn

As at February 12, 2019. A c.0.01% decrease from $42.90bn on February 11, 2019

Brent Crude

$63.70pb

As at February 13, 2019. A c.01.84% increase from $62.55pb on February 12, 2019

 

Bonds

Prices in the FGN Bond market strengthened slightly in today’s session on the back of some order flows largely due to the c.N47bn coupon payments on the 13-Feb-2020 bond which leaves the benchmark today. Demand was strongest on the 2037s, whilst investors also hunted for bargains on the 27s and 28s.

 

We expect yields to remain relatively flat towards weekend, as market players maintain a near term cautious outlook in view of the elections.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.09

14.66

(0.03)

14.50 15-Jul-21

14.89

14.35

(0.09)

16.39 27-Jan-22

14.62

14.39

0.00

14.20 14-Mar-24

14.71

14.60

(0.02)

12.50 22-Jan-26

14.77

14.73

(0.08)

16.29 17-Mar-27

14.88

14.75

(0.03)

13.98 23-Feb-28

14.71

14.57

(0.06)

12.15 18-Jul-34

14.67

14.55

(0.05)

12.40 18-Mar-36

14.53

14.48

(0.06)

16.2499 18-Apr-37

15.09

14.66

(0.03)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a relatively flat note, but with slight sell on the shorter end of the curve due to the relative squeeze in system liquidity. Despite the tight system liquidity levels, the NTB auction by the CBN was significantly oversubscribed by market players, with total bid to cover of 2.86X, largely driven by the significant oversubscription on the 1-year bill (c.N405bn). The CBN eventually sold the total offered amount of c.N153bn with stop rates clearing marginally lower by c.5bps from their previous auction levels.

We expect yields to trend lower tomorrow due to the significant inflows expected form the c.N630bn OMO maturities. The CBN is however expected to float a significant OMO auction to counter the maturities.

NTB Auction Result

Tenor

Rate (%)

Offer (bn)

Sub ('bn)

Sale ('bn)

91-days

10.97

3.38

11.57

3.38

182-days

13.40

10.00

22.11

10.00

364-days

14.95

140.00

404.89

140.00

Source: CBN

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Mar-19

12.00

11.50

(0.30)

4-Apr-19

12.60

11.00

0.10

2-May-19

11.25

11.00

(0.25)

13-Jun-19

12.00

10.50

0.00

18-Jul-19

13.00

12.50

0.00

1-Aug-19

12.95

12.75

0.00

12-Sep-19

14.50

14.30

0.00

3-Oct-19

14.80

14.50

0.00

14-Nov-19

14.95

14.85

0.00

5-Dec-19

14.95

14.80

0.00

2-Jan-20

15.00

14.85

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market moderated marginally by c.3pct as inflows from the c.N47bn bond coupon payments somewhat improved system liquidity levels currently estimated at c.N70bn negative.

We expect rates to slide lower tomorrow, as inflows from the c.N630bn OMO maturities are expected to bolster system liquidity levels. This should however be moderated by a significant OMO sale by the CBN.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

20.00

24.17

Overnight (O/N)

23.17

27.50

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.75/$(spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window however depreciated by c.0.04% to N362.01/$, while the cash and transfer rates at the parallel market remained unchanged at N360/$ and N365.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.75

306.75

CBN SMIS

357.10

357.10

I&E FX Window

362.03

361.87

Cash Market

360.00

360.00

Transfer Market

365.50

365.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

Following sustained gains in Oil prices, yields on the NGERIA Sovereigns pushed lower by c.13bps, with investors ramping up purchases across the curve. The most gains were however at the belly curve, following increased demand for the 25s and 27s.

 

In the NGERIA Corps, yields retraced slightly on the UBANL 22s, with slight sell however on the ACCESS 21s and FIDBAN 22s.

 

Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.



Related News

 

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

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

3.      January 2019 FGN Bond Auction Oversubscribed

4.      Money Market Rate Increased As Overnight Rate Rose To 11.86%

5.      Flour Mills Commercial Paper Offers 14.75% Yield; Offer Closes On Wednesday

6.      Monthly Fixed Income Review For January 2019

7.      Bond Market Maintains Bullish Trend as Panic Buying Sets In

8.     NAFEX Rate Appreciates to Six Month High Amid Renewed FPI Inflows

9.      A Quiet Trading Session as Daily OMO Auction Takes Centre Stage

10.  Market Players Oversubscribe CBN OMO Amid Increased Demand on Short Tenor Bills

11.   NSP-SPV Plc Up to N10Billion 15-Year Series 1 Guaranteed Fixed Rate Senior Green Infrastructure Bond

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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