Stop Rates Remain Unchanged As The CBN Successfully Rolls Over Maturing Ntbills

Proshare

Thursday, November 29, 2018/ 06:22AM / Zedcrest Capital

*** Eurobonds recover following dovish signals from the US FED***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.26%

As at November 21, 2018. A c.2bps down from 11.28% recorded in September 2018

MPR

14.00%

Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting

External Reserves

$41.83bn

As at November 26, 2018. A c.0.55% decrease from $41.60bn on November 23, 2018

Brent Crude

$60.07pb

As at November 28, 2018. A c.0.15% increase from $59.98pb on November 27, 2018

 

Bonds

The Bond Market was more active today with some demand seen especially on the long end of the curve. We saw some local clients cherry pick attractive long end FGN bonds , which was matched with supply from foreign investors downsizing their holdings on FGN papers. Consequently, yields trended lower by c.2bps across the curve to close an at average of 15.44%

 

We expect the market to remain order driven with some client demand expected on the mid- to long-end of the curve as we approach month end.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.01

14.27

0.03

14.50 15-Jul-21

15.41

15.31

0.05

16.39 27-Jan-22

14.95

14.54

(0.04)

14.20 14-Mar-24

15.17

15.07

0.00

12.50 22-Jan-26

15.67

15.46

(0.01)

16.29 17-Mar-27

15.70

15.60

0.01

13.98 23-Feb-28

15.87

15.81

(0.03)

12.15 18-Jul-34

15.60

15.54

(0.11)

12.40 18-Mar-36

15.57

15.42

(0.01)

16.2499 18-Apr-37

15.51

15.39

(0.07)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a quiet note today, as market players shifted focus to the T-bills Primary Market Auction. Bids at the Auction were relatively more aggressive, with significant demand from market players especially on the 182- and 364-day bills which were oversubscribed by c.182% and c.195% respectively.

The DMO consequently rolled over the total amount of maturing T-bills at slightly lower rates; -5bps and -6bs on the 91- and 182-day bills, while the 364-day bill remained unchanged from previous levels. The stop rates for the 91-, 182- and 364-day bills cleared at 10.90%, 13.10% and 14.45% respectively.

We expect the T-bills market to trade with bearish sentiments tomorrow, as the CBN is expected to float an OMO auction to counter maturing OMO bills.


NTB Auction Result

Tenor

Rate (%)

Offer (₦’bn)

Sub (₦'bn)

Sale (₦'bn)

91-days

10.90

22.73

24.52

24.37

182-days

13.10

24.80

45.33

23.18

364-days

14.45

103.07

202.20

103.07

 

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

6-Dec-18

12.90

12.60

0.20

3-Jan-19

13.10

12.60

0.35

14-Feb-19

14.00

13.40

1.00

14-Mar-19

13.10

12.70

0.20

4-Apr-19

13.00

12.55

0.20

2-May-19

13.30

12.60

0.00

18-Jul-19

13.00

12.75

0.00

1-Aug-19

13.95

13.80

0.20

12-Sep-19

14.70

14.50

0.10

3-Oct-19

14.80

14.50

0.20

14-Nov-19

14.85

14.60

0.25

Source: Zedcrest Dealing Desk

 

Money Market

Despite the dearth of liquidity in the Money Market (c.N99bn positive), Overnight (O/N) and Open Buy-Back (OBB) rates remained calm  at 18.00% and 17.17% respectively as there was no significant outflow/inflow impacting the system.

We expect funding rates to trend lower tomorrow as market players anticipate inflows from c.N443.76bn maturing OMO bills. We expect the CBN to aggressively mop up excess liquidity with a second OMO auction this week.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

17.17

16.29

Overnight (O/N)

18.00

17.21

Source: FMDQ, Zedcrest Research

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged to close at N306.80/$ (spot) and N359.81/$ (SMIS). At the I&E FX window a total of $390.15m was traded in 375 deals, with rates ranging between N358.00/$ - N365.60/$. The NAFEX closing rate appreciated by c.0.02% to close at N364.15/$ from N364.22/$ previously.

 

At the Naira/USD rate continued to slide at the parallel market segment, with the both the cash and transfer rates losing c.0.27% to close at N366.00/$ and N368.00/$ respectively.


FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.80

306.80

CBN SMIS

359.81

359.81

I&E FX Window

364.15

364.22

Cash Market

366.00

365.00

Transfer Market

368.00

367.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

We saw some relief on NGERIA Sovereign Eurobonds today with prices strengthening across the curve in today’s session following slight recovery in oil prices and positive outcomes from speeches heads of the US FED and Bank of England. Yields compressed by c.14bps on the average across all the tickers on the curve.

 

Conversely, the NGERIA Corps remained firmly bearish following news of plans to repay $400m Eurobonds two years early by Access Bank. Yields expanded across most tickers, with the DIAMBK 19s taking the most hit as yields trended northwards by c.516bps to close at 28.40% on the bid

 

 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.

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