Market players Oversubscribe 1yr PMA Bill by c.250%

Proshare

Wednesday, September 19, 2018    07:25 PM / Zedcrest Capital

***Nigeria's Total Public Debt at $73 Billion in Second Quarter***- NBS

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.23%

As at September14, 2018,9bps up from 11.14% recorded in July 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$45.07bn

As atSeptember 17, 2018. A c.0.27% decrease from $45.19bnon Sept. 14, 2018

Brent Crude

$78.72pb

As at September19, 2018. A c.0.00% increasefrom$78.71pbon Sept. 18, 2018

 

 

Bonds

The bond market remained scantily traded, with trading activities almost non-existent in the two-way market, except for some buys on the 2021 and 2027 bonds which compressed yields marginally by c.2bps on average.

 

Whilst we note that demand pressures in recent sessions have been largely locally driven and more concentrated around the mid tenors, we expect the market to tilt towards a slightly more bearish stance as we approach the FGN bond auction scheduled to hold next week.

 

Secondary Market Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.40

13.92

(0.04)

14.50 15-Jul-21

15.24

15.15

(0.04)

16.39 27-Jan-22

15.00

14.81

(0.08)

14.20 14-Mar-24

15.13

14.99

0.03

12.50 22-Jan-26

15.24

15.11

0.01

16.29 17-Mar-27

15.20

15.14

(0.05)

13.98 23-Feb-28

15.28

15.22

(0.02)

12.15 18-Jul-34

15.44

15.31

0.02

12.40 18-Mar-36

15.39

15.33

0.00

16.2499 18-Apr-37

15.40

15.29

0.00

Source: Zedcrest Dealing Desk 

 

Treasury Bills

Activities in the T-bills space remained mostly concentrated on the short end of the curve, with rates declining further by c.100bps down to single digit levels on the October maturities. This was due to the significantly buoyant level of system liquidity which came on the back of inflows from Paris club payments to states. We also witnessed slight interests on the March maturities, while yields remained relatively unchanged across other tenors as market players remained cautious in anticipation of results from the Primary Market Auction.

 

Market Players Significantly oversubscribed the 1yr bill by c.250% at today’s PMA. This consequently forced rates lower by c.3bps from their previous levels, down to 13.475%. The 91- and 182-day bills were also slightly oversubscribed, with rates on the 91-day maintained at 11%, while the 182-day cleared 10bps lower at 12.20%.

 

Despite this significantly positive result, we expects sentiments in the market to be dampened by an OMO auction expected to be floated by the bond market  tomorrow. We however expect strong demand for the 1-yr bill, due to the huge amount of lost bids at the auction. If the CBN fails to offer this bill at the OMO tomorrow, there will be a slight rally on that end of the curve.

 

NTB Auction Result

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91 days

11.00

5.40

8.60

5.40

182 days

12.20

8.39

11.86

8.39

364 days

13.48

168.36

419.49

168.36

Source: Zedcrest Research

 

Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

4-Oct-18

11.00

10.50

(1.00)

1-Nov-18

13.05

12.75

0.05

6-Dec-18

13.00

12.75

0.00

3-Jan-19

13.00

12.75

(0.50)

14-Feb-19

13.20

12.90

(0.10)

14-Mar-19

13.05

12.90

(0.05)

4-Apr-19

13.25

12.50

0.00

18-Jul-19

13.30

12.50

0.00

1-Aug-19

13.65

13.00

(0.05)

Source: Zedcrest Dealing Desk

 

 

 Money Market

The OBB and OVN rates declined sharply to lower single digits, closing today at 4.75% and 5.75% respectively. This came on the back of inflows from Paris club refunds to states which bolstered system liquidity significantly higher to c.N720bn from c.N290bn previously.

 

We expect rates to remain moderated tomorrow due to expected inflows from OMO T-bill maturities (c.N218bn).

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.75

9.50

Overnight (O/N)

5.75

10.25

Source: FMDQ, Zedcrest Research

 

FX Market

The Interbank spot rate remained stable at N306.30/$, while the SMIS rate rose by 0.30% to N360.94/$ from N359.85/$ previously.At the I&E FX window, a total of $491.37mn was traded in 305deals, with rates ranging between N358.00/$ - N364.75/$. The NAFEX closing rate appreciatedby c.0.09% to N362.97/$ from N363.30/$ previously.

 

At the parallel market, the cashrates appreciated by 10k to N359.40/$, while the transfer rate remained unchanged at N362.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.30

306.30

CBN SMIS

360.94

359.85

I&E FX Window

362.97

363.30

Cash Market

359.40

359.50

Transfer Market

362.00

362.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Sovereignsstrengthened slightly in today’s session, following slight demand on the longer end of the curve. Investors were mostly bullish on the 2047s which gained c.0.60pct on the day.

 

The NGERIA Corps were mostly quiet for the day, except for slight interests seen on the Access 21s Sub which gained about 0.20pct.

 

 Proshare Nigeria Pvt. Ltd.


 

 Proshare Nigeria Pvt. Ltd.


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1.       Average T-Bills Rate Rose 184bps WoW Amidst Buoyant System Liquidity

2.       Bond Yields Moderate Further Amid Tighter Supply

3.       Average T-bills Yield Rose Significantly by 208bps to Close the Week at 14.43%

4.       Markets Take a Breather as CBN Pauses on OMO

5.       Market Players Selloff Bills above 14% as CBN extends OMO offer to the 1-year

6.       Yield Curve Nears Inversion as DMO Clears 1-Year Bill at 15.60% eff. Yield

7.       Market Players Risk off T-bills, as CBN Elongates OMO Tenor above the 300day Mark

8.       Ahead of Next T-bills Auction Scheduled for 12th Sept, 2018

9.       Market Players Demand Higher Rates for OMO, as PMA Approaches

10.   CBN Raises OMO Stop Rates, Succumbs to Investor Pressure PMA Holds this Wednesday

11.   Average T-Bills Yield Rose by 15bps to Close the Week at 12.36%

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