Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Monday,
March 04, 2019 11:58 AM / Anchoria Research
Money Market
The money market rate increased last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 17.42% and 16.33% respectively. Consequently, the average money market rate fell by 2.67% to settle at 16.88% due to the increase in the System liquidity to cN250bn from a negative figure of cN180bn in the previous week. Major inflow for the week included: OMO Maturity of cN350bn, Coupon Payment on the 2028s Bond and CBN Retail Refund of cN165bn while Major Outflow include Weekly Wholesale, Invisible and SME FX auction of $210mn, OMO Sale of cN1.08trn and Bi-weekly FX auction of cN360bn.
We
expect the rate to close higher this week barring any significant inflow as CBN
prepares for another round of FX auctions on Monday and anticipated OMO
auctions during the week.
Instrument |
22/02/2019 |
01/03/2019 |
Change |
OBB |
18.83% |
16.33% |
-2.50% |
OVN |
20.25% |
17.42% |
-2.83% |
Source:
Anchoria AM Research, FMDQ OTC
Forex: USD/NGN
The CBN Official rate grew by 0.02% to close at N306.80/$ while the rate in the Investors and Exporters’ FX Window fell by 0.13% to close at N361.03/$. We observed an increase in the market turnover in the I&E Window as market turnover hit an all-time high on the back of increased FPI inflows. In a similar vein, Naira at the parallel market appreciated by 0.28% to close at N361.00/$ (using the Everdon BDC Rate).
We expect rates in the parallel market to remain constant as the apex
bank continues to supply FX into the market, coupled with its frequent
Wholesale and Retail SMIS programme.
22/02/2019 |
01/03/2019 |
Change |
|
CBN Official Rate |
306.80 |
306.85 |
+0.02% |
I&E FX Window |
361.49 |
361.03 |
-0.13% |
Everdon BDC Rate |
361.00 |
360.00 |
-0.28% |
Source: Anchoria AM Research, FMDQ
OTC
Commodities
Despite optimistic US and China trade deal, the Brent Crude Oil and WTI
Crude Oil fell by 3.05% and 2.55% to close at $65.07 and $55.80 per barrel
respectively due to comments from President Trump, while the rally late in the
week was due stronge U.S. economic data.
Fixed Income
Bond:
FGN
Following the announcement of the Presidential Election Result, the Bond Market closed on a bullish note with demand more pronounced on 2020s (-199bps) and 2028s (-80bps) bonds. One of the major factors for the bull run in the bond space is the increase in Foreign Portfolio Investment (FPI) as Offshore investors allocate Funds to some assets in Emerging Economies. Average yields fell by 74bps to close the week at 13.95%.
We
expect the bull run to continue this week as Offshore Investors continue to
invest more in Emerging Economies and on the backdrop of the release of the
FAAC allocation.
Secondary
Market
Source:
Anchoria AM Research, FMDQ OTC
Treasury
Bills
Due
to the increase in system liquidity during the week, the treasury bills market
traded on a bullish note. Consequently, the average yield fell significantly by
1.36% to close the week at 12.98%. The T-Bills Primary Market Auction conducted
during the week witnessed significant oversubscription rate of 632% with most
demand seen on the one-year bill.
Secondary
Market
Source:
Anchoria AM Research, FMDQ OTC
Anchoria Research: +234 908 720
6076; research@anchoriaam.com
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