Nigerian Eurobonds rise 45bps W-on-W as Bearish Sentiments Trail Eurobond Launch

Proshare

Friday, November 16, 2018/ 07:19PM / Zedcrest Capital

***BPE Begins Commercialisation of Four River Basin Devt Authorities***

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

$41.62bn

As at November 15, 2018. A c.0.05% decrease from $41.64bn on November 14, 2018

Brent Crude

$68.10pb

As at November 16, 2018. A c.1.57% decrease from $67.05pb on November 15, 2018

 

 

Bonds

The bond market closed on a relatively flat note, with slight interests still seen on the 2028s at c.15.83%. Yields were however higher by c.8bps w/w following a spike in yields earlier in the week.

 

In the coming week, we expect a slight uptick in yields, due to expectations for bearish signals from MPC and Inflation releases, coupled with expectations for a c.N115bn bond issuance by the DMO. Bargain Interests from clients should however keep yields subdued below the 16% mark in the near term.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.92

14.11

(0.01)

14.50 15-Jul-21

15.35

15.18

(0.02)

16.39 27-Jan-22

15.06

14.57

0.06

14.20 14-Mar-24

15.27

15.11

0.03

12.50 22-Jan-26

15.65

15.46

(0.01)

16.29 17-Mar-27

15.68

15.51

0.00

13.98 23-Feb-28

15.90

15.82

(0.02)

12.15 18-Jul-34

15.83

15.61

0.01

12.40 18-Mar-36

15.65

15.52

0.01

16.2499 18-Apr-37

15.60

15.50

0.00

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market also remained relatively flat following the signifcant OMO sale by the CBN in the previous session. Yields were however higher by c.15bps w/w following slight selloff by market players prior to the NTB auction conducted earlier in the week.

 

In the coming week, we expect yields to maintain a slight uptrend, due to expectations for renewed OMO and FX interventions by the CBN.

 

 


Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

12.60

11.40

0.00

3-Jan-19

13.00

12.45

0.00

14-Feb-19

13.00

12.80

(0.20)

14-Mar-19

13.15

12.70

(0.10)

4-Apr-19

12.95

12.45

(0.05)

18-Jul-19

13.00

12.70

0.00

1-Aug-19

13.60

13.25

(0.05)

12-Sep-19

14.50

14.35

(0.15)

3-Oct-19

14.55

14.30

(0.10)

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates remained relatively stable to close the week at 6.33% and 7.17% respectively, as system liquidity improved slightly to c.N300bn positive.

 

We expect rates to trend slightly higher opening next week, as market players are expected to fund for a Wholesale SMIS by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

6.67

5.75

Overnight (O/N)

7.33

6.42

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 $108.17mn was traded in 352 deals, with rates ranging between N357.00/$ - N365.00/$. The NAFEX closing rate depreciated by c.0.03% to N364.01/$ from N363.90/$ previously.

 

At the parallel market segment, the cash and transfer rates depreciated further by 70k and 50k to N363.50/$ and N366.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.70

306.70

CBN SMIS

360.85

360.85

I&E FX Window

364.01

363.90

Cash Market

363.50

362.80

Transfer Market

366.00

365.50

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns closed the week on a bearish note, with yields now higher by c.45bps w/w, as market players were mostly bearish for most of the week in the wake of the c.$2.9bn Eurobonds sale by the FG at significantly higher rates.  

 

In the NGERIA Corps, we saw interests mostly focused on the DIAMBK 19s which were sold off significantly higher in the previous week. Yields on the ticker are now lower by c.12% from their recent highs. We also witnessed slight interests on the FIDBAN 22s today, while the ACCESS 21s, FBNNL 21s and ZENITH 22s recorded decent gains for the week.

 

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

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