Culled—Proshare
November 13, 2017/@ZedcrestCapital
The Bond Market
The bond market opened the week on a slightly bullish note, with demand especially on the 2024 (-5bps) and 2036 (-5bps) bonds. The 2027 bond was however the most traded with yield compressing slightly by 3bps. Average bond yields consequently declined by 4bps to 14.99% as market players maintained a positive outlook on the market. We expect yields to trend slightly lower tomorrow due to renewed interest on bonds at current levels.
| Table 1: FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 15.21 | 15.14 | (0.03) |
| 15.54 13-Feb-20 | 14.88 | 14.81 | (0.08) |
| 14.50 15-Jul-21 | 15.08 | 15.01 | (0.06) |
| 16.39 27-Jan-22 | 14.73 | 14.66 | (0.05) |
| 14.20 14-Mar-24 | 14.95 | 14.88 | (0.05) |
| 12.50 22-Jan-26 | 15.09 | 15.02 | (0.05) |
| 16.29 17-Mar-27 | 15.20 | 15.13 | (0.03) |
| 12.15 18-Jul-34 | 14.92 | 14.85 | (0.02) |
| 12.40 18-Mar-36 | 14.92 | 14.85 | (0.05) |
| 16.25 18-Apr-37 | 14.96 | 14.89 | (0.01) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market opened the week on a relatively quiet note, as market players continued to pour their demand into the OMO auction by the CBN. The CBN sold a total of N4bn 94-day and N61.73bn 185-day bills at 16% and 17.80% respectively. We however witnessed some buying interests on some Dec-17 (-295bps) and Apr-18 (-60bps) bills, as the average T-bills yields declined by 13bps to 18.06%. We expect the market to be slightly bullish tomorrow, ahead of the Primary market auction scheduled for Wednesday.
| Table 2: Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 7-Dec-17 | 17.00 | 16.75 | 0.00 |
| 4-Jan-18 | 17.20 | 16.95 | 0.00 |
| 1-Feb-18 | 17.75 | 17.50 | 0.25 |
| 1-Mar-18 | 17.60 | 17.35 | 0.00 |
| 5-Apr-18 | 17.10 | 16.85 | (0.40) |
| 3-May-18 | 17.40 | 17.15 | 0.00 |
| 14-Jun-18 | 17.85 | 17.60 | 0.00 |
| 5-Jul-18 | 17.00 | 16.75 | 0.00 |
| 2-Aug-18 | 16.70 | 16.45 | 0.00 |
| 13-Sep-18 | 16.30 | 16.05 | 0.00 |
| 4-Oct-18 | 15.90 | 15.65 | 0.00 |
Source: Zedcrest Dealing Desk
| Table 3: OMO – 11 November 2017 | ||||
| Tenor | Rate (%) | Offer (NBn) | Sub (N’bn) | Sale (N’bn) |
| 94 day | 16.00 | 20.00 | 4.00 | 4.00 |
| 185 day | 17.80 | 80.00 | 61.73 | 61.73 |
Source: CBN
The Money Market
The OBB and OVN rates rose by c.11% to 17.83% and 19.75% due to the combined effect of the OMO T-bill sales (N65.73bn) and Wholesale SMIS by the CBN ($100m). System Liquidity is however estimated to close on a positive note due to cash inflows from retail FX refunds by the CBN which came in after market close. We consequently expect rates to trend lower tomorrow.
| Table 4: Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 17.83 | 7.17 |
| Overnight (O/N) | 19.75 | 7.75 |
Source: FMDQ, Zedcrest Research
The FX Market
The CBN Official spot rate depreciated by 0.02% to N306.00/$ from its previous day rate of N305.95/$. This is following the CBN’s intervention in the market to the tune of $100million via a Wholesale SMIS. Its external reserves is however recorded to have improved by 2.04% to $34.16billion as at 10th of November.
Rates at the Investors and exporters FX window appreciated to N360.20/$ from N360.40/$ in the previous session. The parallel market rate however stayed unchanged at N361.20/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.00 | 305.95 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 360.20 | 360.40 |
| Parallel Market | 361.20 | 361.20 |
Source: FMDQ, REXEL BDC
