PMA Stop Rates Clear c.40bps lower following c.530% Oversubscription

Proshare

Thursday, March 21, 2019 09:10 AM / Zedcrest Capital

***US Fed Sees No 2019 Hikes, Plans September End to Asset Drawdown***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.31%

As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019

MPR

14.00%

Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves

$43.41bn

As at March 19, 2019. A c.0.21% increase from $43.32bn on March 18, 2019

Brent Crude

$67.74pb

As at March 20, 2019. A c.0.30% increase from $67.54pb on March 19, 2019

 

Bonds

The FGN Bond market tilted slightly bearish as the DMO released its bond offer circular for the month, indicating its intention to offer N100bn of the 2023, 2025 and 2028 bonds at an auction scheduled to hold on the 27th of the month.

 

Due to expectations for renewed supply of bonds and the slowdown in demand interests in recent sessions, we expect yields to trend slightly higher towards the auction, with the most uptick expected on the shorter end of the curve where supply is heaviest. 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.81

14.31

0.16

16.39 27-Jan-22

14.50

14.34

0.00

12.75 27-Apr-23

14.50

14.43

(0.05)

14.20 14-Mar-24

14.40

14.08

0.03

13.53 23-Mar-25

14.53

14.41

0.07

12.50 22-Jan-26

14.44

14.32

0.04

16.29 17-Mar-27

14.46

14.31

0.06

13.98 23-Feb-28

14.40

14.30

0.02

12.15 18-Jul-34

14.39

14.25

0.12

12.40 18-Mar-36

14.30

14.13

0.05

16.2499 18-Apr-37

14.29

14.14

0.08

Source: Zedcrest Dealing Desk

 

 

Treasury Bills

The T-bills market turned bullish in today’s session, with yields compressing by c.10bps on average, as market players cherrypicked on relatively attractive yields in the seondary market due to expectations for a further compression in rates at the NTB auction by the CBN.

Despite offering only c.N49b T-bills, the CBN received subcriptions totalling c.N259bn at today’s NTB auction, with c.86% of the total demand skewed towards the 364-day maturity. Stop rates consequntly fell by c.40bps from their levels at the previous auction, down to 10.30%, 12.20% and 12.345% on the 91, 182 and 364-day bills respectively.

We expect the market to remain slightly bullish tomorrow, whilst the CBN is expected to conduct an OMO auction to counter c.N121bn OMO maturities.

 


NTB Auction Result

Tenor

Rate (%)

Offer (bn)

Sub ('bn)

Sale ('bn)

91-days

10.30

3.00

7.85

3.00

182-days

12.20

8.39

30.07

8.39

364-days

12.35

37.18

220.62

37.18

Source: CBN

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

4-Apr-19

12.00

10.00

(1.00)

2-May-19

11.00

9.00

(0.50)

13-Jun-19

11.70

11.50

(0.05)

18-Jul-19

12.25

12.00

(0.25)

1-Aug-19

12.50

11.85

(0.50)

12-Sep-19

13.15

13.00

(0.05)

3-Oct-19

13.10

12.95

(0.10)

14-Nov-19

13.10

13.05

(0.10)

5-Dec-19

13.15

13.00

0.05

2-Jan-20

13.05

12.90

(0.10)

6-Feb-20

12.80

12.65

(0.10)

Source: Zedcrest Dealing Desk 

 

 

Money Market

Rates in the money market trended slightly lower as there were no significant funding pressures in the system which closed the session at c.N170bn positive. The OBB and OVN rates consequently closed the day at 10.17% and 11.17% respectively.

We expect rates to remain relatively stable tomorrow, barring a significant OMO sale by the CBN.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

10.17

12.00

Overnight (O/N)

11.17

12.67

Source: FMDQ, Zedcrest Research 

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N305.90/$ (Spot) and N356.92/$ (SMIS). The NAFEX closing rate in the I&E weakened slightly by 0.07% to N360.40/$, while the cash and transfer rates at the parallel market remained unchanged at N357.80/$ and N364.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

356.92

356.92

I&E FX Window

360.40

360.13

Cash Market

357.80

357.80

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns traded on a slightly bearish note as market players awaited details from the US FOMC meeting. Yields consequently ended the session c.3bps higher on the day. Given the re-affirmation of a dovish stance by the US FED, we expect a renewed bullish trend in the market tomorrow.

 

In the NGERIA Corps, we witnessed renewed interests on the UBANL and FIDBAN 22s.



Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 

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3.      NAFEX Rate Weakens as Turnover Dips to c.$100m

4.      Money Market Rate Increased As Overnight Rate Rose To 11.67%

5.      Bond Market Trades Flat, Despite Inflation Dip

6.      CBN Delivers Further Cut to Stop Rate in c.N400bn OMO Sale

7.      Robust Demand Sees Significant Drop in T-bills Yields at The PMA

8.     One Year T-bill to Clear Significantly Lower at PMA Tomorrow

9.      Nigerian Eurobonds Turn Bullish as Oil Prices Move Higher

10.  Increased OMO Mop-Ups by CBN Drive T-Bills Average Yield up to 13.5% as PMA Holds this Wednesday


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