Nigerian Fixed Income Market Stays Calm Ahead of MPC Meeting

Proshare

Tuesday, November 20, 2018/ 05:57AM / Zedcrest Capital

***Investor interest renewed in New Nigeria Eurobonds***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at October 16, 2018. October 2018 report to be released November 23, 2018

MPR

14.00%

Final MPC Meeting of the year rescheduled till after holiday break, set for 21st and 22nd November, 2018

External Reserves

$41.60bn

As at November 16, 2018. A c.0.05% decrease from $41.62bn on November 15, 2018

Brent Crude

$66.50pb

As at November 19, 2018. A c.2.35% decrease from $68.10pb on November 16, 2018

 

 

Bonds

The FGN bond market traded on a quiet note with low trading volumes seen across the curve. Market participants remained cautious ahead of the MPC Meeting scheduled for later this week.

 

We expect market direction to be skewed towards the outcome of the MPC meeting and the DMO Bond auction slated for Wednesday and Thursday this week. We still maintain a bearish outlook for bonds till the end of the year.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.88

14.19

(0.04)

14.50 15-Jul-21

15.37

15.16

0.02

16.39 27-Jan-22

14.94

14.55

(0.12)

14.20 14-Mar-24

15.30

15.05

0.03

12.50 22-Jan-26

15.66

15.46

0.01

16.29 17-Mar-27

15.69

15.50

0.01

13.98 23-Feb-28

15.90

15.81

0.00

12.15 18-Jul-34

15.75

15.63

(0.08)

12.40 18-Mar-36

15.66

15.50

0.01

16.2499 18-Apr-37

15.62

15.49

0.02

Source: Zedcrest Dealing Desk

 

Treasury Bills

Similarly, the T-bills market traded flat across the curve, in line with market expectations ahead of the MPC meeting later in the week.


We maintain our expectations for yields to trend upwards, due to reduced system liquidity levels and expectations for renewed OMO supply later in the week.

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

12.50

11.50

(0.10)

3-Jan-19

13.00

12.45

0.00

14-Feb-19

13.20

12.85

0.20

14-Mar-19

13.05

12.70

(0.10)

4-Apr-19

12.95

12.45

0.00

18-Jul-19

13.00

12.70

0.00

1-Aug-19

13.60

13.25

0.00

12-Sep-19

14.50

14.35

0.00

3-Oct-19

14.55

14.35

0.00

14-Nov-19

14.55

14.40

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Money Market rates opened the week higher, as market participants made provisions for the FX Wholesale intervention by the CBN. The OBB and OVN rose by c.3.5pp to close at 10.17% and 10.33% respectively, following a drop in system liquidity levels.

 

We expect rates to remain at these levels after the break, with some respite expected later via OMO maturities.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

10.17

6.67

Overnight (O/N)

10.83

7.33

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate dropped by 5k to close at N306.75/$ (spot) and remained unchanged at N360.85/$ (SMIS). At the I&E FX window a total of $129.06mn was traded in 320 deals, with rates ranging between N356.00/$ - N364.75/$. The NAFEX closing rate appreciated by c.0.09% to N363.69/$ from N364.01/$ previously.

 

At the parallel market segment, the cash and transfer rates both depreciated further by 50k to close N364.00/$ and N366.50/$ respectively.

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.75

306.70

CBN SMIS

360.85

360.85

I&E FX Window

363.69

364.01

Cash Market

364.00

363.50

Transfer Market

366.50

366.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns witnessed continued bearish trend across the curve, as investors priced in weak oil price and stock figures. The NGERIA 49s traded on a mixed note, with intraday demand was witnessed during the trading session, pushing prices well above the 101.00 mark. This was however short lived as we saw some profit taking towards the close of trading with the price retracing to close at 100.00.

 

In the NGERIA Corps, we saw interests mostly focused on the DIAMBK 19s as investors await fresh news about the issuer.

 



Proshare Nigeria Pvt. Ltd.



 Proshare Nigeria Pvt. Ltd.

 

 

 

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