Nigerian Eurobond Offer Records Significant Over Subscription with Skew to the 7-Yr

Proshare

Thursday, November 15, 2018/ 07.15AM / Zedcrest Capital

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KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at October 16, 2018, 5bps up from 11.23% recorded in August 2018.

MPR

14.00%

Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting

External Reserves

$41.67bn

As at November 13, 2018. A c.0.05% decrease from $41.69bn on November 12, 2018

Brent Crude

$66.75pb

As at November 14, 2018. A c.0.92% decrease from $67.37pb on November 13, 2018

 

 

Bonds

Spreads were tighter today, with some client interests seen flowing into the market on the mid to long end mostly, as market players cherrypicked on some attractive yield offerings especially on the 2034s.

 

Despites renewed client interests witnessed in recent sessions, we maintain a slightly bearish outlook, due to the recent weakness in oil prices and expectations for renewed supply of bonds at the forthcoming auction.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.92

14.12

(0.01)

14.50 15-Jul-21

15.39

15.20

(0.17)

16.39 27-Jan-22

15.10

14.53

(0.04)

14.20 14-Mar-24

15.25

15.09

(0.03)

12.50 22-Jan-26

15.69

15.44

0.00

16.29 17-Mar-27

15.66

15.53

(0.03)

13.98 23-Feb-28

15.96

15.81

(0.04)

12.15 18-Jul-34

15.93

15.71

(0.07)

12.40 18-Mar-36

15.65

15.50

(0.06)

16.2499 18-Apr-37

15.59

15.51

0.00

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a relatively flat note, with volumes traded much weaker than in the previous session. This was as market players shifted focus to the primary market auction, which recorded robust subcsriptions of c.N403.90bn, with an average bid to cover ratio of 3.15 of the c.N128.24bn offered and sold. Rates cleared lower on the 91- and 182-day bills offered, due to the lesser volumes on offer. They however inched higher by c.5bps on the 364-day in line with expectations.

 

We expect yields to remain slightly pressured tomorrow, as the CBN is expected to intervene in the market via an OMO auction, to mop up c.N423bn in maturing OMO bills.

 

NTB PMA Result - 14 November 2018

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91 days

10.95

3.38

3.68

3.38

182 days

13.16

16.92

71.96

16.92

364 days

14.45

107.94

328.26

107.94

Source: CBN

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

12.50

12.10

(0.30)

3-Jan-19

13.00

12.70

0.15

14-Feb-19

13.00

12.85

0.20

14-Mar-19

13.25

12.60

0.25

4-Apr-19

13.00

12.45

0.00

18-Jul-19

13.00

12.65

0.00

1-Aug-19

13.65

13.15

0.20

12-Sep-19

14.50

14.30

0.00

3-Oct-19

14.50

14.30

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates remained relatively unchanged from their previous levels, closing today at 5.75% and 6.42%, as system liquidity remained moderately robust at c.N313bn positive.

 

We expect rates to remain moderated, with inflows from OMO maturities expected to further bolster system liquidity.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.75

5.67

Overnight (O/N)

6.42

6.58

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.70/$ (spot) and N360.85/$ (SMIS). At the I&E FX window a total of $169.98mn was traded in 371 deals, with rates ranging between N358.00/$ - N365.00/$. The NAFEX closing rate depreciated by c.0.15% to N364.24/$ from N363.71/$ previously.

 

At the parallel market segment, the cash rate appreciated by 10k to N361.80/$, while the transfer rate remained unchanged at N364.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.70

306.70

CBN SMIS

360.85

360.85

I&E FX Window

364.24

363.71

Cash Market

361.80

361.90

Transfer Market

364.50

364.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were surprisingly well bid in today’s session, following significant oversubscription for the New 7, 12 and 30yr Eurobond offerings to the tune of $9.25bn of the c.$2.9bn intended to be raised. A greater percentage of subscriptions were skewed to the 7-yr, while rates cleared not too far from guidance as follows:

 

Maturity

Tenor

Allotment

Yield

Nov 2025s

7yr

$1.19bn

7.625%

Jan 2031s

12yr

$1bn

8.75%

Jan 2049s

30yr

$750mn

9.25%

 

               

In the NGERIA Corps, clients remained well bid on the DIAMBK 19s, FBNNL 21s, ZENITH 22s and UBANL 22s. Other tickers were relatively flat on the day.

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


 

 

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