Nigerian Eurobond yields hit new YTD Highs amid weakness in EM Credits

Proshare

Friday, June 8, 2018 11:00PM / Zedcrest Capital

***Local Bond Market Closes Bearish as Traders remain risk off***
 

KEY INDICATORS

Inflation

12.48%

Declined by 0.86% in April from 13.34% in March 2018

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018

External Reserves

$47.42billion

Fell by 0.02% as at 7 June from $47.43bn as at 6 June 2018

Brent Crude

$76.75pb

Fell by 0.17% from $76.88pb on 6 June 2018

 

 

Bonds

The Bond market traded on a bearish note with yields rising higher by c.10bps d/d, despite the scanty volume of trades done in the market. This came as traders remained risk off, following continued bearish sentiments on the longer end of the curve. We expect this trend to persist, but with strong resistance expected at 13.70% on the longer end of the curve.

 

FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

12.06

11.30

0.24

15.54 13-Feb-20

12.77

12.51

(0.17)

14.50 15-Jul-21

13.53

13.35

0.14

16.39 27-Jan-22

13.58

13.27

0.21

14.20 14-Mar-24

13.42

13.28

0.10

12.50 22-Jan-26

13.66

13.57

0.07

16.29 17-Mar-27

13.48

13.37

0.11

12.15 18-Jul-34

13.68

13.57

0.07

12.40 18-Mar-36

13.65

13.52

0.05

16.25 18-Apr-37

13.68

13.52

0.13


























Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market traded on a flat note with only slight demand witnessed from clients. Yields remained stable as system liquidity remained relatively buoyant at c.N400bn despite funding for Retail FX bids by the banks. We expect yields to remain relatively stable on Monday, barring an OMO auction sale by the CBN.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Jun-18

13.00

12.00

0.00

5-Jul-18

13.00

11.00

0.00

2-Aug-18

12.50

11.50

0.00

13-Sep-18

12.00

11.50

0.00

4-Oct-18

12.50

11.50

0.00

1-Nov-18

12.50

11.50

0.00

6-Dec-18

12.25

12.00

0.00

3-Jan-19

12.30

12.05

0.00

14-Feb-19

12.15

11.50

0.00

14-Mar-19

12.50

11.50

0.00

4-Apr-19

12.50

11.00

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates rose slightly higher to 4.83% and 5.33% respectively. This came as banks funded in advance of their retail FX purchase for next Friday. This was however moderated by inflows from retail FX refunds, with system liquidity consequently estimated at c.400bn from c.N560bn opening today. We expect rates to remain relatively stable opening next week, as there are no significant funding pressures anticipated.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.83

3.00

Overnight (O/N)

5.33

3.58

Source: FMDQ, Zedcrest Research

 

 FX Market

The Interbank rate remained stable at its previous rate of N305.95/$, even as system liquidity maintained a steady decretion down to $47.42bn as at 7-June. The I&E FX rate also remained relatively stable at N360.91/$. In the parallel market, cash rates appreciated by 50k to N361.00/$, while the transfer market rate remained stable at N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.95

305.95

CBN SMIS

330.00

330.00

I&E FX Window

360.91

360.94

Cash Market

361.00

361.50

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

  

Eurobonds:

The NGERIA Sovereigns remained significantly bearish with yields rising by c.8bps, consequently capping a whooping 33bps w/w rise in the average bond yields. Yields on most maturities have now hit their highest levels since issuance, with the 20yr being the hardest hit now trading slightly above the 8.00% yield mark.

 

The NGERIA Corps didn’t fare much better, as investors remained bearish across most of the traded tickers. We witnessed the most selloffs on the Access 21s and UBANL 22s which lost -1.00pt and -0.80pt respectively. The FIDBAN 22s were also sold off, with its yield now well above the 10% mark, last seen at 10.17%.

 

 

 Proshare Nigeria Pvt. Ltd.

 

  

 

Proshare Nigeria Pvt. Ltd.




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