NAFEX Rate Appreciates to Six Month High Amid Renewed FPI Inflows

Proshare

Thursday, February 07,  2019  07:40 PM / Zedcrest Capital

*** Oil Slips As Investors Weigh Up Supply Factors***

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

$42.99bn

As at February 6, 2019. A c.0.07% decrease from $43.02bn on February 5, 2019

Brent Crude

$62.33pb

As at February 7, 2019. A c.0.45% decrease from $62.61pb on February 6, 2019

 

Bonds

The Bond market traded on a significantly bullish note with yields compressing by further by c.9bps, following increased demand on the mid to long end of the curve from both local and offshore investors.

 

Market sentiment has turned bullish since the January FGN Bond auction, with yields having compressed by c.30bps to date. Whilst we expect the buying interests to persist, we anticipate a slight reversal in yields towards month end.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.04

14.43

(0.11)

14.50 15-Jul-21

15.04

14.86

(0.03)

16.39 27-Jan-22

14.88

14.33

(0.02)

14.20 14-Mar-24

14.71

14.29

(0.05)

12.50 22-Jan-26

14.85

14.70

(0.10)

16.29 17-Mar-27

14.93

14.77

(0.10)

13.98 23-Feb-28

15.01

14.89

(0.11)

12.15 18-Jul-34

14.92

14.71

(0.07)

12.40 18-Mar-36

14.85

14.73

(0.17)

16.2499 18-Apr-37

14.82

14.68

(0.16)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market remained slightly bearish as the CBN floated another OMO auction which was significantly oversubscribed by market players especially on the 364-day bill offered. The CBN consequently sold a total of c.N321bn of the N250bn offered as it looked to mop up the c.N315bn in maturing OMO bills.

We expect yields to close the week on a relatively flat note, with the CBN expected to sustain its OMO interventions in the market tomorrow.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

13.50

12.35

0.50

14-Mar-19

13.50

11.25

1.75

4-Apr-19

12.00

10.00

1.00

2-May-19

11.15

11.00

0.15

13-Jun-19

12.95

10.00

1.25

18-Jul-19

13.75

12.40

0.75

1-Aug-19

13.30

13.20

0.05

12-Sep-19

14.75

14.40

0.05

3-Oct-19

14.90

14.50

0.05

14-Nov-19

14.95

14.85

0.05

5-Dec-19

15.00

14.75

0.05

2-Jan-20

15.00

14.75

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market remained elevated as inflows from OMO maturities were completely mopped up by a further OMO sale by the CBN. The OBB and OVN rates consequently ended the session marginally lower at 17.33% and 18.42% respectively.

We expect rates to remain elevated closing the week, as there are no significant inflows anticipated.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

17.33

20.67

Overnight (O/N)

18.42

21.83

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.70/$ (spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window appreciated further by c.0.02% to a six month high of N361.64/$ amid renewed inflows from offshore investors and exporters since the start of the new month. At the parallel market, the cash rate depreciated by c.0.28% to N359.20/$, while the transfer rate remained unchanged at N365.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.70

306.70

CBN SMIS

357.10

357.10

I&E FX Window

361.64

361.72

Cash Market

359.20

358.20

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL BDC

 

 

 

Eurobonds

The NGERIA Sovereigns pulled back gains in today’s session, with yields trending higher by c.9bps on average, as some investors lightened their holdings in view of the strengthening of the US dollar.

 

In the NGERIA Corps, yields were relatively flat across board, except for slight selloff on the DIAMBK 19s.

 

 Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.



Related News

 

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

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

4.      Buoyant Liquidity Level Spurs Buying Interest as Average Yield Compresses to 13.2%WoW

5.      Bond Market Closed On A Bullish Note With Increased Demand Seen On Most Maturities

6.      February 2019 FGN Savings Bonds Offer For Subscription

7.      Bond Yields Break Key Support amid Renewed Offshore Interests

8.     Massive Rally on Eurobonds as US FED Strikes Dovish Tone

9.      Summary of January 2019 FGN Bond Auction Results

10.  Bond Auction Rates Clear Lower With Increased Demand on the 10-yr

11.   Nigerian Eurobonds Turn Bearish Ahead of US FOMC Decision


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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