Markets trade flat as CBN sells OMO to manage maturities

Proshare

Thursday, August 09, 2018 /10:00PM / Zedcrest Capital

 

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.23%

As at July 23, 2018, 38bps down from 11.61% recorded in May 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$46.76bn

As at August 8, 2018. A c.0.11% decrease from $46.81bn as at August 7, 2018.

Brent Crude

$72.00pb

As at August 9, 2018. A c.0.24% increase from $71.83pb as at August 8, 2018

 

 

Bonds

The Bond market traded flat today as yields closed at the same levels as the previous trading session. Activities were at the short-end of the curve, with some demand witnessed on the Jan 2022s (yields dropped by c.13bps) while there were some sell-offs on the Mar 2024s.

 

We expect this tepid trend to continue as market players expect renewed supply of bonds at the forthcoming auction.

 

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

13.57

12.90

0.00

14.50 15-Jul-21

13.74

13.57

0.02

16.39 27-Jan-22

13.98

13.68

(0.13)

14.20 14-Mar-24

13.74

13.68

(0.07)

12.50 22-Jan-26

14.26

14.13

0.02

16.29 17-Mar-27

14.31

14.18

0.08

13.98 23-Feb-28

14.42

14.34

0.02

12.15 18-Jul-34

14.25

14.18

(0.01)

12.40 18-Mar-36

14.27

14.19

0.03

16.2499 18-Apr-37

14.21

14.12

(0.03)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded bearish today, as market participants factored in supply from the OMO auction and repriced the maturities on the mid- to long-end accordingly. Yields expanded by c.3bps on the average across the benchmark securities.

 

The CBN sold a total of c.N377bn at today’s OMO auction to manage excess liquidity via maturities of N452bn. The stop rates for the 91-day and 203-day T-bills were maintained at 11.05% and 12.15% respectively.

 

We expect the recent trend in the T-bills to continue tomorrow. Yields should consequently tick slightly higher on average.

OMO Auction Results (9 August 2018)

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91 days

11.05

100.00

27.43

27.43

203 days

12.15

350.00

349.64

349.64

 

Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

13-Sep-18

10.35

9.95

(0.15)

4-Oct-18

10.50

10.00

0.10

1-Nov-18

11.40

11.15

(0.05)

6-Dec-18

11.95

11.85

0.00

3-Jan-19

12.10

11.85

0.05

14-Feb-19

12.15

12.00

0.05

14-Mar-19

12.10

11.85

0.15

4-Apr-19

12.05

11.20

0.05

18-Jul-19

11.40

10.80

0.05


Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates closed marginally higher today at 8.00% and 8.92% respectively following the CBN’s OMO auction sales. Net System Liquidity closed c.N264bn positive, as the CBN OMO sold c.N377bn to mop up c.N452bn in maturities.

 

We expect rates to remain stable in single digit territory as there are no significant funding pressures expected tomorrow.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.00

7.75

Overnight (O/N)

8.92

8.54

Source: FMDQ, Zedcrest Researc h


FX Market

The Naira remained stable at N306.00/$ at the interbank market. At the I&E FX Window, the Naira depreciated by 0.03% to close at N362.19/$ (from N362.08/$ previously).

 

The parallel market saw a further convergence of the rates, as cash rates closed weaker at N359.70/$ (from N358.50/$ previously) and the transfer rates strengthened to close at N361.00/$ (from N361.50/$ previously).

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.00

306.00

CBN SMIS

352.00

330.00

I&E FX Window

362.19

362.08

Cash Market

359.70

358.50

Transfer Market

361.00

361.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns continued the recent bearish trend in today’s session, with yields rising further by c.17bps on average across the curve. Yields moved up across all trading tickers, with the most witnessed on the Nov 2027s and Feb 2030s which rose by c.25bps (-3.53pct) and c.22bps (-2.97pct) d/d respectively.

 

Activities in the NGERIA Corps were mixed, with sell-offs witnessed on the short-end while some demand witnessed at the mid- to long-end. The most sell-off was witnessed on the ACCESS 21s, which rose by c.33bps (-3.56pct) 22s while the ECOTRA 21s gained c.16bps (1.64pct) following client demand.

 

 Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

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