T-Bill Rates to Clear Lower at Tomorrow’s NTB Auction

Proshare

Tuesday, March 19, 2019 07:10 PM / Zedcrest Capital

***Nigeria Seeks Concessional Loans Over Bonds as Debt Costs Rise *** - Bloomberg

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

$43.32bn

As at March 18, 2019. A c.0.63% increase from $43.05bn on March 15, 2019

Brent Crude

$67.54pb

As at March 19, 2019. A c.0.10% increase from $67.45pb on March 18, 2019

 

Bonds

The FGN Bond market traded on a relatively quiet note except for slight sell witnessed on the 2028 bond towards the close of the trading session. Yields however compressed by c.3bps on average, following slight decline in yields on the short end of the curve.

 

We expect demand interests to be relatively muted, with yields expected to remain stable in the near term.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.65

14.30

(0.06)

16.39 27-Jan-22

14.50

14.35

(0.08)

12.75 27-Apr-23

14.55

14.45

0.00

14.20 14-Mar-24

14.37

14.05

(0.03)

13.53 23-Mar-25

14.46

14.37

(0.08)

12.50 22-Jan-26

14.40

14.31

0.00

16.29 17-Mar-27

14.40

14.30

0.04

13.98 23-Feb-28

14.38

14.33

0.03

12.15 18-Jul-34

14.27

14.25

(0.10)

12.40 18-Mar-36

14.25

14.14

(0.05)

16.2499 18-Apr-37

14.21

14.12

(0.01)

Source: Zedcrest Dealing Desk 

 

 

Treasury Bills

The T-bills market traded on a relatively quiet note, with yields trending slightly higher following an OMO auction announcement by the CBN. The OMO auction was howewer oversubcribed by c.105%, leading to a further cut in stop rates by 4bps to 11.80% on the 93-day and by 6bps to 13.14% on the 205-day, with total sale of N15.90bn and N100.41bn respectively.

The CBN would conduct an NTB auction tomorrow, with only c.N49bn T-bills on offer. Given the signifcantly smaller amount of T-bills on offer, we expect stop rates to clear at about 15 - 30bps lower than their levels in the previous week’s auction.

 

OMO Auction Result

Tenor

Rate (%)

Offer (N’bn)

Sub (N'bn)

Sale (N'bn)

93 day

11.80

30.00

26.04

15.90

205 day

13.14

70.00

179.26

100.41

Source: CBN

 

NTB Auction Expectation

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

3.00

10.55 - 10.85

10.75

182 days

8.39

12.30 - 12.70

12.50

364 days

37.18

12.25 - 12.55

12.85

Source: Zedcrest Research

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

4-Apr-19

13.00

10.00

0.00

2-May-19

11.50

10.00

(0.05)

13-Jun-19

11.75

11.65

0.05

18-Jul-19

12.50

12.00

0.00

1-Aug-19

13.00

11.85

0.90

12-Sep-19

13.20

13.00

0.05

3-Oct-19

13.20

13.15

0.00

14-Nov-19

13.20

13.05

0.00

5-Dec-19

13.10

13.00

0.10

2-Jan-20

13.15

12.95

0.15

6-Feb-20

12.90

12.65

0.05

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market trended higher by c.2pct due to the c.N116bn OMO sale which led to a decline in system liquidity from opening levels of c.N285bn. The OBB and OVN rates consequently ended the session at 12.00% and 12.67% respectively.

We expect rates to remain relatively stable tomorrow, as there are no significant outflows anticipated.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.00

10.58

Overnight (O/N)

12.67

11.58

Source: FMDQ, Zedcrest Research

 

 

 

FX Market

At the Interbank, the Naira/USD rate strengthened by 0.02% to N306.90/$ at the spot market, while the SMIS rate remained unchanged at N356.92/$. The NAFEX closing rate in the I&E window appreciated by 0.13% to N360.13/$, 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

306.95

CBN SMIS

356.92

356.92

I&E FX Window

360.13

360.61

Cash Market

357.80

357.80

Transfer Market

364.00

364.00

Source: CBN, FMDQ, REXEL BDC

 

 

 

Eurobonds

The NGERIA Sovereigns remained bullish, with yields lower by c.7bps on average. The most demand was still witnessed in the belly of the curve which gained c.0.60pct on the day.

 

In the NGERIA Corps, we witnessed slight interests on the FBNNL 21s and FIDBAN 22s.



Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd.

 

 

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