PMA Rates Clear Higher Amid Tighter System Liquidity

Proshare

Wednesday, September 17, 2018/ 08.01PM / Zedcrest Capital


***Senate Approves Issuance of $2.786bn Eurobond for 2018 Budget Funding***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.23%

As at September14, 2018,9bps up from 11.14% recorded in July 2018.

MPR

14.00%

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

External Reserves

$42.91bn

As atOctober16, 2018. A c.0.21% decrease from $43.00bnon October15, 2018

Brent Crude

$80.19pb

As at October 17, 2018. A c.1.72% increasefrom$81.59pbon October 16, 2018

 

 

Bonds

The bond market remained scantily traded in today’s session with slight sell pressures witnessed on the shorter end of the curve (24s mostly). Yields were consequently higher by c.6bps as buying interests remained largely absent for the third consecutive session.

 

We expect this trend to persist, as market players are expected to stay cautious in anticipation of the forthcoming bond auction, where demand is expected to be weaker compared to the previous auction. 

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.07

13.57

0.04

14.50 15-Jul-21

15.04

14.54

0.09

16.39 27-Jan-22

14.78

14.01

0.25

14.20 14-Mar-24

15.10

14.89

0.08

12.50 22-Jan-26

14.99

14.87

0.06

16.29 17-Mar-27

15.13

15.07

(0.02)

13.98 23-Feb-28

15.28

15.21

0.01

12.15 18-Jul-34

15.27

15.18

0.00

12.40 18-Mar-36

15.28

15.14

0.01

16.2499 18-Apr-37

15.15

14.96

0.03

Source: Zedcrest Dealing Desk 

 

Treasury Bills

Yields in the T-bills market inched marginally higher by c.5bps, amid a sustained tightening of system lqiudity, which opened the day in negative territory. Market players also stayed on the sidelines for most of the trading session, in anticpation of results of the PMA.

 

Of the total amount of c.N147.64bn on offer, the DMO recorded total subscriptions of c.N204bn and was cosequently able to raise the total amount offered. In line with our expectations, rates cleared above their previous levels, with the most uptick recorded on the 182-day (+59bps) at 12.69%, while the 91 and 364-day cleared at 10.96% (+6bps) and 13.449% (+12bps) respectively.

 

We expect the market to remain slightly bearish tomorrow, as the CBN is expected to float an OMO auction in lieu of the c.N347bn OMO maturities.

 


NTB PMA Result

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91 days

10.96

5.85

5.92

5.85

182 days

12.69

29.25

30.49

29.25

364 days

13.45

112.54

167.59

112.54


Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Nov-18

13.35

12.90

(0.15)

6-Dec-18

12.90

12.65

0.00

3-Jan-19

12.55

12.35

0.05

14-Feb-19

12.80

12.50

(0.05)

14-Mar-19

12.70

12.45

(0.15)

4-Apr-19

12.55

12.25

0.05

18-Jul-19

13.25

12.90

0.25

1-Aug-19

13.30

13.00

0.05

12-Sep-19

13.50

13.35

0.25

Source: Zedcrest Dealing Desk 

 

 

Money Market

In line with our expectations, the OBB and OVN rates, remained slightly above the 20% mark, closing today at 22.67% and 24.79%, as system liquidity dipped into negative territory opening the day.

 

We expect rates to dip slightly tomorrow, due to anticipated inflows from OMO maturities. This is however barring a significant OMO sale by the CBN.


 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

22.67

24.14

Overnight (O/N)

24.79

26.50

Source: FMDQ, Zedcrest Research

 

 

FX Market

At the Interbank, the Naira/USD rate remained stable at N306.50/$ (spot) and N362.52/$ (SMIS). At the I&E FX window a total of $317.11mn was traded in 272 deals, with rates ranging between N358.00/$ - N365.00/$. The NAFEX closing rate appreciated by c.0.10% toN363.96/$ from N364.33/$ previously.

 

At the parallel market, the cash rate appreciated by 10k to N360.10/$ while the transfer rates remained unchanged at N363.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.50

306.50

CBN SMIS

362.52

362.52

I&E FX Window

363.96

364.33

Cash Market

360.10

360.20

Transfer Market

363.50

363.50

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA sovereigns reversed some of its recent gains in today’s session, as news of approval of a c.$2.8bn Eurobond issuance by the Nigerian Senate filtered into the market. Yields were higher by c.5bps, with the most losses seen on the 20-yr (2038) which lost c.0.50pct on the day.

               

Demand for the NGERIA Corps remained relatively muted, except for continued interest on the DIAMBK 19s and late bids seen on the SEPLLN 23s.


 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.



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