Culled—Proshare
December 15, 2017/@ZedcrestCapital
*** FG to issue N10.69b Green Bond***
KEY INDICATORS
| Inflation | 15.91% | Declined by 0.07% in October from 15.98% in September 2017 |
| MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting of November 2017 |
| External Reserves | $36.43billion | Accreted 1.94% as at 11th December from $36.01 as at 8th December 2017 |
| Brent Crude | $62.64pb | Fell by 1.40% from $63.53pb on 14th December 2017 |
Bonds
The Bond market opened today on a significantly bullish note, following the significant oversubscription at the bond auction of the previous day. The market however turned weaker due to profit taking by market players who had pre-auction bond positions at very attractive levels. Market activity was focused more on the 2021, 2027 and 2037 bonds, as their yields rose by c.39bs from their opening market lows of 12.97 % (2021s), 13.00% (2027s) and 13.05% (2037s), to close at 13.32%, 13.40% and 13.46% respectively. Average bond yields however fell by 17bps to close at 13.49%, from its previous day level of 13.66%. We expect a slight compression in yields tomorrow, as we maintain our bullish bias on bonds at current levels.
| Table 1: Benchmark FGN Bond Yields | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 13.53 | 13.46 | 0.06 |
| 15.54 13-Feb-20 | 13.52 | 13.45 | (0.09) |
| 14.50 15-Jul-21 | 13.32 | 13.25 | (0.44) |
| 16.39 27-Jan-22 | 13.53 | 13.46 | (0.19) |
| 14.20 14-Mar-24 | 13.54 | 13.47 | (0.07) |
| 12.50 22-Jan-26 | 13.58 | 13.51 | (0.29) |
| 16.29 17-Mar-27 | 13.30 | 13.23 | (0.34) |
| 12.15 18-Jul-34 | 13.52 | 13.45 | (0.16) |
| 12.40 18-Mar-36 | 13.59 | 13.52 | (0.03) |
| 16.25 18-Apr-37 | 13.45 | 13.38 | (0.14) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market was scantily traded in today’s session, despite the significant inflows from OMO and NTB maturities. This was as market players remained cautious on the sustainability of rates at current levels, coupled with some profit taking by local and offshore clients. We witnessed most trades on the short and medium end of the curve (Jan – Jun), with the bulk of trades consummated between 10% – 12% levels. Average T-bills yields however declined by 45bps to close today at 13.81%. We expect a further decline in yields tomorrow due to the sizeable liquidity in the market.
| Table 2: Benchmark Treasury Bills Rates | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Jan-18 | 12.20 | 11.95 | (0.80) |
| 1-Feb-18 | 13.00 | 12.75 | (1.00) |
| 1-Mar-18 | 11.50 | 11.25 | (0.50) |
| 5-Apr-18 | 13.25 | 13.00 | (0.25) |
| 3-May-18 | 13.50 | 13.25 | 0.00 |
| 14-Jun-18 | 13.25 | 13.00 | (0.25) |
| 5-Jul-18 | 12.50 | 12.25 | (0.60) |
| 2-Aug-18 | 13.00 | 12.75 | 0.00 |
| 20-Sep-18 | 12.50 | 12.25 | 0.00 |
| 4-Oct-18 | 12.30 | 12.05 | 0.00 |
| 1-Nov-18 | 12.45 | 12.20 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates declined further today to close at 1.42% and 1.88%, as market liquidity was significantly bolstered by inflows from OMO (N209bn) and PMA (N131bn) maturities. System liquidity is consequently estimated to close at N780bn long, from a positive opening figure of N440bn. We expect rates to close slightly higher tomorrow, due to expected outflows for bond auction settlement and retail FX funding by banks.
| Table 3: Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 1.42 | 2.50 |
| Overnight (O/N) | 1.88 | 3.00 |
Source: FMDQ, Zedcrest Research
FX Market
The CBN Official spot rate appreciated slightly by 0.02% to N306.25/$, from its previous day rate of N306.30/$. Rates at the Investors and exporters FX window depreciated by 25k to close at N360.66/$. Rates at the parallel market however stayed flat at N362.00/$.
| Table 4: FX Rates | ||
| Current (N/$) | Previous (N/$) | |
| CBN Spot | 306.25 | 306.30 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 360.66 | 360.41 |
| Parallel Market | 362.00 | 362.00 |
Source: CBN, FMDQ, REXEL BDC
