Traders Take Profit on Nigerian Eurobonds Ahead of US FED Rate Decision

Proshare

 Saturday, July 27,  2019  07:00AM / Zedcrest Capital 


 

Yields trended higher in the NGERIA Sovereign space as some expectations for a more than a quarter point rate cut by the US FED faded, following the fairly positive US Q2 19 GDP results (2.1% actual vs 1.8% consensus). Yields were consequently higher by c.7bps on the day, with the 47s and 49s the hardest hit.

 

Below are highlights of trading activities in the fixed income and forex market today

 

 

Bonds

The FGN Bond market traded on a relatively calm note, with yields marginally lower by c.2bps following continued interests on the Short end of the curve. We however witnessed slightly improved offers on the mid to long end of the curve.

 

We expect yields to remain relatively stable in the near term, due to the depressed yields levels in the T-bills market.

 

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

12.74

12.71

(0.56)

16.39 27-Jan-22

12.92

12.32

(0.09)

12.75 27-Apr-23

13.43

12.91

0.34

14.20 14-Mar-24

13.56

12.60

(0.03)

13.53 23-Mar-25

13.57

12.76

0.05

12.50 22-Jan-26

13.93

13.56

0.00

16.29 17-Mar-27

13.84

13.69

0.05

13.98 23-Feb-28

13.87

13.61

0.00

12.15 18-Jul-34

14.12

14.00

(0.01)

12.40 18-Mar-36

14.08

13.87

(0.05)

16.2499 18-Apr-37

14.07

13.94

0.03

14.80 26-Apr-49

14.10

14.06

(0.02)


Source: Zedcrest Dealing Desk
 

 

 

 

Treasury Bills

Yields inched marginally higher by c.5bps in the T-bills market, as demand interest remained suppressed by the tighter system liquidity levels in the money market.

 

In anticipation of FAAC inflows early next week, we expect a slight compression in the T-bills yield curve.

 

 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Aug-19

10.00

5.00

0.00

12-Sep-19

10.45

9.45

0.20

3-Oct-19

10.40

9.50

(0.10)

14-Nov-19

10.40

9.50

(0.10)

5-Dec-19

11.15

10.50

0.05

2-Jan-20

11.20

11.00

(0.05)

6-Feb-20

11.20

10.50

0.05

19-Mar-20

11.15

10.60

0.00

2-Apr-20

11.20

10.60

0.00

14-May-20

11.25

10.75

0.20

04-Jun-20

11.20

10.75

0.15

Source: Zedcrest Dealing Desk


 

Money Market

Rates in the money market rose higher by c.7pct, as outflows for FGN bond auction settlement pressured system liquidity lower. The OBB and OVN rates consequently ended the session at 21.86% and 23.21%, with system liquidity estimated to close at c.N90bn negative.

 

We expect rates to remain elevated opening the new week, as banks fund for a weekly wholesale FX auction by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

21.86

14.29

Overnight (O/N)

23.21

15.00

Source: FMDQ, Zedcrest

 

 

 

FX Market

At the interbank, the Naira/USD rate remained stable at N306.90/$ (Spot) and N357.70/$ (SMIS).  The NAFEX closing rate at the I&E window rose further by 7k to N361.97/$, whilst the market turnover rose by 70% to $295m. At the parallel market, the cash and transfer rates remained stable at N357.70/$ and N362.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

357.70

357.70

I&E FX Window

361.97

361.91

Cash Market

357.70

357.70

Transfer Market

362.00

362.00

Source: CBN, FMDQ, REXEL BDC 

 

 

Eurobonds

The NGERIA Corps remained relatively stable, but with better sellers seen on the ETINL 24s, whilst the FIDBAN 22s remained mostly bid.

 

Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd. 


 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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