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Offshore Clients take profit on the 20-yr, following MPC suspension by the CBN

Proshare

Monday January 22, 2018/6.00pm/Zedcrest Capital

KEY INDICATORS

Inflation

15.37%

Declined by 0.54% in December from 15.90% in November 2017

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting of November 2017

External Reserves

$39.92billion

Accreted 1.78% as at 18th January from $39.86 as at 17th January 2017

Brent Crude

$68.59pb

Fell by 0.52% from $68.95pb on 19th  January 2018

 














Bonds
The bond market maintained a bearish trend, with yields rising by c.10bps, on the backdrop of some profit taking by offshore clients on the 2037 bond which was sold up to 13.39% before retracing slightly back to 13.34%. We witnessed some buying interests however on the 2021 bond, while other bonds traded on a relatively quiet note. Yields are currently trading trending close to 13.40%, C.5bps away from our upper bid range. We consequently expect that most trades will be done at these levels (13.30% - 13.40%) and we do not see yields going significantly above our 13.45% mark.

Table 1: Benchmark FGN Bond Yields

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

13.79

13.72

0.15

15.54 13-Feb-20

13.63

13.56

0.14

14.50 15-Jul-21

13.37

13.30

0.09

16.39 27-Jan-22

13.40

13.33

0.11

14.20 14-Mar-24

13.50

13.43

0.14

12.50 22-Jan-26

13.43

13.36

0.12

16.29 17-Mar-27

13.49

13.42

0.09

12.15 18-Jul-34

13.35

13.28

0.04

12.40 18-Mar-36

13.46

13.39

0.06

16.25 18-Apr-37

13.39

13.32

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Source: Zedcrest Dealing Desk
 

Treasury Bills
The T-bills market was slightly bearish, following the OMO auction by the CBN on the 26-Apr and 2-Aug bills. Yields consequently rose by c.17bps with slight sell especially on the Feb, Apr, Aug and Oct tenors. We expect the market to remain slightly bearish due to the continued OMO issuance by the CBN and tight system liquidity.


Table 2: Benchmark Treasury Bills Rates

Description

Bid (%)

Offer (%)

Day Change (%)

1-Feb-18

15.00

14.85

0.60

1-Mar-18

13.90

13.75

0.00

5-Apr-18

14.65

14.50

0.40

3-May-18

14.35

14.20

0.05

14-Jun-18

14.35

14.20

0.15

5-Jul-18

13.90

13.75

0.00

2-Aug-18

14.40

14.25

0.30

20-Sep-18

14.40

14.25

0.00

4-Oct-18

14.35

14.20

0.35

1-Nov-18

13.55

13.40

0.00

3-Jan-19

13.50

13.35

0.00

Source: Zedcrest Dealing Desk

OMO Auction Result

Tenor

Rate (%)

Offer (NBn)

Sub (N'bn)

Sale (N'bn)

94 day

12.60

30.00

0.19

0.19

192 day

14.40

50.00

75.27

75.27

Source: CBN

Money Market
The OBB and OVN rates declined slightly by 150bps to 15.17% and 16.17%, even as system liquidity is estimated to be in Repo, following the OMO and wholesale FX sales by the CBN. We expect rates to decline slightly tomorrow, as banks would be able to access the CBN window to fund for their shortfalls.

 

Table 3: Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.17

16.67

Overnight (O/N)

16.17

17.67


Source: FMDQ, Zedcrest Research
   

FX Market
The CBN Official spot rate appreciated by 0.02% to N305.65/$ from its previous day rate of N305.70/$. Rates at the Investors and exporters FX window depreciated by 0.16% to N360.67/$. Rates at the parallel market also depreciated by 0.06% to N363.00/$.

Table 4: FX Rates

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.65

305.70

CBN SMIS

330.00

330.00

I&E FX Window

360.67

360.10

Parallel Market

363.00

362.80

Source: CBN, FMDQ, REXEL BDC 

For more details email 
research@zedcrestcapital.com or call the dealing desk via 01-6311667

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