Proshare - Facebook Proshare - Twitter Proshare - Google+ Proshare - Linked In Proshare - RSS Feed

T-bill Yields Tick Higher Despite Huge OMO Inflows

Proshare

Thursday, June 21, 2018 / 09:40 PM / Zedcrest Capital

***OPEC inches towards oil output deal ahead of key meeting***

KEY INDICATORS

Inflation

11.61%

Declined by 0.87% in May from 12.48% in April 2018

MPR

14.00%

Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018

External Reserves

$47.63billion

Rose by 0.42% as at 13 June from $47.43bn as at 7 June 2018

Brent Crude

$73.33pb

Fell by 2.46% from $75.18pb on 20 June 2018

 

 

Bonds

Bond yields declined slightly by c.7bps in today’s session, with some cherry-picking observed especially on the 2036 and 2037 bonds. This came on the back of a slowdown in offshore selling witnessed in the previous session.  We expect a further decline in yields tomorrow, as they are relatively attractive at current levels. This is however barring a renewed offshore selloff.

 


FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

12.37

12.10

(0.39)

15.54 13-Feb-20

13.09

12.72

0.16

14.50 15-Jul-21

13.53

13.47

(0.34)

16.39 27-Jan-22

13.78

13.17

(0.04)

14.20 14-Mar-24

13.80

13.27

0.02

12.50 22-Jan-26

13.91

13.59

(0.09)

16.29 17-Mar-27

13.76

13.60

(0.01)

13.98 23-Feb-28

13.87

13.65

0.05

12.15 18-Jul-34

13.97

13.58

0.01

12.40 18-Mar-36

13.93

13.65

(0.05)

16.2499 18-Apr-37

13.81

13.70

(0.12)

Source: Zedcrest Dealing Desk

 

 Treasury Bills

The T-bills market traded on a relatively flat note, with yields inching slightly higher by c.6bps on average. This came as market players were looking to preserve some liquidity in anticipation of funding for a retail SMIS by the CBN tomorrow. We expect yields to remain slightly pressured due to the anticipated FX funding. The CBN did not conduct an OMO auction which was much anticipated due to the c.N380bn OMO T-bills maturities. We expect that this may on the reverse side, fuel some client demand in absence of an OMO T-bill auction tomorrow.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

5-Jul-18

12.00

10.50

0.00

2-Aug-18

13.00

12.00

0.00

13-Sep-18

12.50

12.00

0.00

4-Oct-18

12.30

11.90

0.00

1-Nov-18

12.60

12.00

0.00

6-Dec-18

12.20

11.90

0.00

3-Jan-19

12.25

12.00

0.00

14-Feb-19

12.30

10.00

0.00

14-Mar-19

12.30

10.00

0.00

4-Apr-19

12.30

10.00

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

The OBB and OVN rates crashed significantly by c.10pct to 3.00% and 3.75%, as system liquidity was significantly bolstered by inflows from OMO T-bill maturities and Net PMA repayments (c.N400bn).  System Liquidity is consequently estimated to close at c.480bn positive, from c.N200bn in the previous session. We however expect rates to trend higher tomorrow due to anticipated funding for retail FX sales by the CBN. 


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.00

12.50

Overnight (O/N)

3.75

14.25

Source: FMDQ, Zedcrest Research 

  

FX Market

The Interbank rate appreciated by 0.02% to N305.80/$ from its previous rate of N305.85/$. The I&E FX rate also appreciated marginally by 0.01% to N361.14/$. In the parallel market, cash rates remained stable at N360.00/$, while the transfer market rate fell back by 20k to N364.50/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.80

305.85

CBN SMIS

330.00

330.00

I&E FX Window

361.14

361.18

Cash Market

360.00

360.00

Transfer Market

364.50

364.30

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds:

The NGERIA Sovereigns traded on a relatively flat note with not much seen in the way of flows on the bonds. Yields consequently remained relatively unchanged from their previous day’s levels, with the most action seen on the shorter end of the curve (21s - 23s) which compressed marginally by 2bps on average.

 

The NGERIA Corps were slightly more active, with investors still selling off on the FBNNL 20s (+34bps) and ECOTRA 21s (+8bps). We however witnessed slight buying interests on the Zenith 22s (-11bps) and DIAMBK 19s (-2bps).

 

 Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

 Related News

1.       Offshore Selloff Drives FGN Bond Yields Closer to 14%

2.       DMO Publishes Q1 2018 Debt Data; Total Public Debt Stood At N22.71trn or US$74.28bn

3.       Invest in FGN Monthly Bond Auction – June 2018

4.       Funding rates Crash below 5% as CBN Holds off on OMO ahead of Sallah Break

5.       Market players Stay Cautious despite Projected Decline in Inflation

6.       Investors Remain Bearish on Nigerian Eurobonds ahead of Expected US Rate Hike

7.       Ahead Of Next T-Bills Auction Scheduled 13th of June 2018

8.       Expected Downtrend in Inflation to Moderate Pressure on Yields

9.       Nigeria Wins Three EMEA Awards – DMO

10.   Nigerian Eurobond yields hit new YTD Highs amid weakness in EM Credits

11.   FMDQ Partners FSD, Climate Bonds to Launch Nigeria’s Pioneer Green Bond Market Development Programme

12.   System Liquidity Rises above N500bn, bolstered by Net OMO Repayments

13.   Senate Approves Interim Report of the Ad-hoc Committee on Promissory Notes and Bond Issuance Program

14.   More Local FGN and Corporate Issuances Expected in H2 2018 - Zedcrest

 

 

READ MORE:
Related News