Short end T-bill Yields Trend Lower as Market players Maintain Risk Averse Posture

Proshare

Monday, August 27, 2018 /06:50PM / Zedcrest Capital

***Nigeria’s GDP grows by 1.5% in Q22018***- NBS

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.14%

As at August15, 2018,9bps down from 11.23% recorded in June 2018.

MPR

14.00%

Next MPC meeting scheduled for September 24 & 25, 2018

External Reserves

$46.13bn

As atAugust 23, 2018. A c.0.26% decrease from 46.25% on August 20 2018

Brent Crude

$76.25pb

As at August 27, 2018. A c.0.37% decrease, from$76.53pb on August 24, 2018

 

Bonds

The Bond market opened the week on a relatively quiet note, with scanty trades observed on the mid to long end of the curve. Market players showed more preference for the longer tenured bonds, while yields on the short and medium tenured bonds tracked slightly higher due to the relatively weaker demand in those segments. Yields consequently closed at c.3bps higher across the curve.

 

We expect yields to remain relatively stable in the near term, but with the broader market sentiment expected to lean towards a slightly more bearish outlook, due to slower than expected GDP growth and weaker capital importation figures in Q2 2018.

 

 

Secondary Market Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

13.96

13.54

0.11

14.50 15-Jul-21

14.50

13.92

0.13

16.39 27-Jan-22

14.28

13.92

0.02

14.20 14-Mar-24

14.56

14.36

(0.02)

12.50 22-Jan-26

14.97

14.86

0.02

16.29 17-Mar-27

14.94

14.89

0.01

13.98 23-Feb-28

14.93

14.82

0.04

12.15 18-Jul-34

14.95

14.83

0.00

12.40 18-Mar-36

15.00

14.91

(0.04)

16.2499 18-Apr-37

14.90

14.82

(0.01)

Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market was also relatively quiet, but with further downtrend in yields observed on the shorter end of the curve (<90days), as market players maintained risk averse sentiment, with expectations of higher yields on T-bills as we approach year end. Yields on the mid to long end remained flat, with no significant demand observed in those segments.

We expect yields to remain slightly pressured, due to relatively weak client demand, and sustained OMO interventions by the CBN.

Secondary Market Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

13-Sep-18

11.00

10.50

(0.60)

4-Oct-18

11.00

10.40

(0.50)

1-Nov-18

11.80

11.40

0.10

6-Dec-18

12.10

11.90

0.00

3-Jan-19

12.30

12.15

0.00

14-Feb-19

12.30

12.15

0.00

14-Mar-19

12.20

12.10

0.00

4-Apr-19

12.20

11.80

0.00

18-Jul-19

12.25

11.45

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN ratesrose above its long sustained single digit levels, closing today at 12.83% and 13.92% respectively. This was likely due to outflows for a wholesale FX funding by banks, which is estimated to have compressed the net system liquidity below N300bn.

 

Rates are expected to trend lower in subsequent sessions, with inflows from OMO maturities and FAAC payments expected before week end.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.83

6.75

Overnight (O/N)

13.92

7.92

Source: FMDQ, Zedcrest Research

FX Market

The Naira/USD rate remained unchanged at the interbank,closing at N306.10/$. At the I&E FX window, a total of $431.39mn was traded in 425 deals, with rates ranging between N330.00/$ - N364.00/$. The NAFEX reference rate depreciated by 0.18%,hittinga 12-Month high of N363.00/$.

At the parallel market, the cash rates remained unchanged at N359.30/$, while transfer rates appreciated by 50k to N361.50/$.

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.10

306.10

CBN SMIS

352.00

352.00

I&E FX Window

363.00

362.35

Cash Market

359.30

359.30

Transfer Market

361.50

362.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NIGERIA Sovereigns were flat for the day, with no significant trading observed on the back of the bank holiday in the UK.

 

The NIGERIA Corps were also relatively muted, except for slight interests seen on the ZENITH and FIDBAN 22s.

 

Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.



Related News  

1.       Another Mark of Debt Externalisation

2.       Yields Retrace Slightly as Offshore Sellers Take a Breather

3.       Bearish Trend Sustained as Average Rate Advanced 19bps to 11.7%

4.       Investment Opportunities in Commercial Papers

5.       Fixed Income Market Monitor – Overnight Rate Fell to 833%

6.       Bond yields Test 15% levels amid continued Offshore Selloff

7.       Market Sentiment remains weak as EM pressures Persist

8.       DANGCEM Proposed Issuance of 950 Billion Series 3 and 4 Commercial Paper

9.       Stop rates close higher at the fifth consecutive DMO FGN Bond auction

10.   DMO Releases Public Debt Data for June 2018; FGN Domestic Debt Declines

11.   EMs see respite as Turkey’s Lira recovers, local markets still on the decline

12.   EM Contagion continue to hit local markets as Bond Yields weaken further

 

READ MORE:
Related News
SCROLL TO TOP