T-bills Remain Bearish Despite Robust System Liquidity

Proshare

Friday, June 23, 2018 / 09:40 PM / Zedcrest Capital

***Oil output to rise by 1m barrels a day as OPEC reaches compromise***

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

$75.11pb

Rose by 2.43% from $73.33pb on 21 June 2018

  

Bonds

Bond yields maintained a slightly downward trend on the back of a slowdown in offshore selloff which has consequently reduced the bearish pressures on the medium to long end of the curve. We expect that this trend will persist in the coming week. We however do not see yields going significantly below their current levels, as market players anticipate fresh supply of bonds from the auction scheduled to hold Wednesday. 


FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

16.00 29-Jun-19

12.89

12.31

0.52

15.54 13-Feb-20

13.06

12.28

(0.03)

14.50 15-Jul-21

13.47

13.28

(0.06)

16.39 27-Jan-22

13.64

13.25

(0.14)

14.20 14-Mar-24

13.64

13.27

(0.16)

12.50 22-Jan-26

13.74

13.63

(0.17)

16.29 17-Mar-27

13.69

13.56

(0.07)

13.98 23-Feb-28

13.84

13.61

(0.03)

12.15 18-Jul-34

13.91

13.67

(0.06)

12.40 18-Mar-36

13.88

13.74

(0.05)

16.2499 18-Apr-37

13.79

13.69

(0.02)

Source: Zedcrest Dealing Desk

   

Treasury Bills

The T-bills market remained slightly bearish, despite the robust level of liquidity in the system. This came on the back of some selloff on the Sep - Dec maturities. We however witnessed slight demand on the Jul/Aug maturities, with market players showing preference for the shorter tenured maturities in recent sessions. This we presume is most likely a safeguard from a possible hike in T-bill rates, as they have been relatively unattractive to market players at current levels.

 

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

5-Jul-18

13.00

12.00

1.00

2-Aug-18

13.00

12.00

0.00

13-Sep-18

13.00

12.00

0.50

4-Oct-18

12.50

12.00

0.20

1-Nov-18

12.80

12.30

0.20

6-Dec-18

12.80

12.40

0.60

3-Jan-19

12.30

11.90

0.05

14-Feb-19

12.50

10.50

0.20

14-Mar-19

12.50

10.50

0.20

4-Apr-19

12.50

10.50

0.20

Source: Zedcrest Dealing Desk 

 

Money Market

The OBB and OVN rates declined further to 2.83% and 3.58% respectively, as the market was awash with liquidity from retail FX refunds and OMO repayments in the previous session. The outflows for retail FX funding did not consequently have any significant impact on the funding rates, with system liquidity estimated at c.N550bn positive. We expect rates to remain moderated opening next week. This is however barring a significant OMO intervention sale by the CBN

 


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.83

3.00

Overnight (O/N)

3.58

3.75

Source: FMDQ, Zedcrest Research 

  

FX Market

The Interbank rate remained stable at its previous rate of N305.80/$. The I&E FX rate appreciated further by 0.04% to N361.00/$. In the parallel market, cash rates appreciated by 20k to N359.80/$, while the transfer rate also strengthened by 50k to N364.00/$.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

305.80

305.80

CBN SMIS

330.00

330.00

I&E FX Window

361.00

361.14

Cash Market

359.80

360.00

Transfer Market

364.00

364.50

Source: CBN, FMDQ, REXEL BDC

  

Eurobonds:

The NGERIA Sovereigns traded on a significantly bullish note, with yields compressing by c.24bps across the curve. The bonds have consequently begun to recover from the earlier selloffs witnessed in the previous week. We witnessed the most buys on the 2032s and 2047s which gained +2.15pt and +2.35pt respectively.

 

The NGERIA Corps were also slightly bullish, with decent recoveries seen on the ECOTRA 21s and ACCESS 21s snr. We also witnessed slight buying interests on the FBNNL 21s and Zenith 22s.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



 

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