Money Market Rates hit Five Month High as CBN Maintains OMO Interventions

Proshare

Tuesday, December 11, 2018/ 08:24AM / Zedcrest Capital


***Naira Gains further on the Streets, with continued dollar supply to BDCs***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.26%

As at November 21, 2018. A c.2bps down from 11.28% recorded in September 2018

MPR

14.00%

Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting

External Reserves

$42.60bn

As at December 7, 2018. A c.0.26% increase from $42.49bn on December 5, 2018

Brent Crude

$60.71pb

As at December 10, 2018. A c.3.91% increase from $63.18pb on December 7, 2018

 

Bonds

The FGN bond market resumed the week on a relatively quiet note, but with slight increase in traded volumes observed on the mid to long end of the curve. Slight demand for the 2024 and 2028 bonds compressed yields marginally by c.2bps on average.

 

We expect the market to remain relatively flat in the near term, as weaker oil prices continue to weigh on positive growth sentiments.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.28

14.95

0.04

14.50 15-Jul-21

15.69

15.32

0.00

16.39 27-Jan-22

15.01

14.79

0.00

14.20 14-Mar-24

15.17

15.09

(0.12)

12.50 22-Jan-26

15.84

15.68

0.00

16.29 17-Mar-27

15.78

15.69

(0.01)

13.98 23-Feb-28

15.97

15.87

(0.04)

12.15 18-Jul-34

15.75

15.59

(0.01)

12.40 18-Mar-36

15.76

15.65

(0.01)

16.2499 18-Apr-37

15.64

15.49

(0.01)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market maintained a slightly bearish posture in today’s session, as the CBN resumed its OMO interventions, with offers on the 108, 185 and 209-day maturities. The OMO auction attracted total subscriptions of c.N64bn of the N150bn offered, with rates maintained at 11.90%, 13.50% and 15.00%, on the respective maturities.

 

We expect rates in the market to remain elevated, as the CBN is expected to maintain its pace of OMO interventions in anticipation of c.N551bn OMO maturities on Thursday.

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Jan-19

14.75

14.00

(0.25)

14-Feb-19

14.80

14.30

(0.20)

14-Mar-19

14.30

11.50

(0.20)

4-Apr-19

14.50

12.85

0.00

2-May-19

13.90

12.90

0.00

18-Jul-19

14.00

12.70

0.00

1-Aug-19

15.00

14.50

0.00

12-Sep-19

15.25

14.75

0.25

3-Oct-19

15.10

14.50

0.00

14-Nov-19

15.05

14.75

(0.05)

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market hit a five moth high in today’s session, with the OBB and OVN rates closing at 39.17% and 41.58%, as the CBN maintained its mop up of system liquidity via OMO (N64bn) and wholesale FX interventions ($210m) in the interbank. System liquidity is consequently estimated to close at c.N60bn from c.N200bn opening the day.

We expect rates to remain elevated, with the CBN expected to maintain its spate of OMO interventions in the market.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

39.17

24.33

Overnight (O/N)

41.58

26.08

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD spot rate depreciated by c.0.02% to close at N306.90/$, while the SMIS rate remained unchanged at N359.81/$. At the I&E FX window a total of $281.07 traded in 423 deals, with rates ranging between N358.00/$ - N366.00/$. The NAFEX closing rate appreciated by c.0.08% to close at N365.03/$ from N365.33/$ previously.

 

At the parallel markets, the cash and transfer rates appreciated by c.0.82% and c.0.27% to close at N363.00 and N368.00 respectively, as the CBN maintained its FX sales to BDC operators.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.85

CBN SMIS

359.16

359.16

I&E FX Window

365.03

365.33

Cash Market

363.00

366.00

Transfer Market

368.00

369.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

Yields remained relatively stable on the NGERIA Sovs, with yields closing relatively unchanged on the day. We witnessed slight interest on the 2023 bond, which was offset by some sell pressure on the longer end of the curve.

 

The NGERIA Corps were relatively muted, except for slight interests on the DIAMBK 19s (-123bps d/d) and the ACCESS and FBNNL 21s.




Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 

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