Culled—Proshare
19/12/2017/@ZedcrestCapital
*** FG offers N10.7bn Green Bonds at 13.48%***
KEY INDICATORS
| Inflation | 15.90% | Declined by 0.01% in November from 15.91% in October 2017 |
| MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting of November 2017 |
| External Reserves | $36.85billion | Accreted 1.92% as at 14th December from $36.72 as at 13th December 2017 |
| Brent Crude | $63.12pb | Rose by 0.25% from $62.96pb on 18th December 2017 |
Bonds
Yields in the bond market declined by 28bps in today’s session, as market players were net buyers of the medium tenured (5 -10yr) and the 20-yr 2037 bonds. Average bond yields consequently fell to 14.06% from 14.34% in the previous session. The decline in yields could be largely attributed to speculative buys by some market players in anticipation of a further compression in the bond yield curve. We however expect a slight uptick in yields tomorrow, due to lack of significant client interest in bonds at current levels.
| Table 1: Benchmark FGN Bond Yields | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 14.48 | 14.41 | (0.34) |
| 15.54 13-Feb-20 | 14.12 | 14.05 | (0.49) |
| 14.50 15-Jul-21 | 13.80 | 13.73 | (0.61) |
| 16.39 27-Jan-22 | 13.96 | 13.89 | (0.27) |
| 14.20 14-Mar-24 | 14.06 | 13.99 | (0.35) |
| 12.50 22-Jan-26 | 14.12 | 14.05 | (0.29) |
| 16.29 17-Mar-27 | 14.09 | 14.02 | (0.19) |
| 12.15 18-Jul-34 | 14.03 | 13.96 | (0.17) |
| 12.40 18-Mar-36 | 14.00 | 13.93 | 0.00 |
| 16.25 18-Apr-37 | 13.94 | 13.87 | (0.04) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively quiet note today, with only few trades executed on some Apr – Aug maturities, as the CBN continued its OMO auction, which it resumed in the previous session. A total of N22bn of the 1-Mar and N107bn of the 23-Aug bills were sold by the CBN with stop rates dropping by 5bps to 13.10% and 14.90% respectively. The CBN has signaled its intention to continue its OMO T-bill interventions in order to moderate the amount of liquidity in the system. We consequently expect rates in the secondary market to trade around these levels (13% – 15%) in the near term.
| Table 2: Benchmark Treasury Bills Rates | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Jan-18 | 12.50 | 12.25 | 0.00 |
| 1-Feb-18 | 12.90 | 12.65 | 0.00 |
| 1-Mar-18 | 13.30 | 13.05 | (0.30) |
| 5-Apr-18 | 14.45 | 14.20 | 0.15 |
| 3-May-18 | 14.60 | 14.35 | 0.00 |
| 14-Jun-18 | 14.70 | 14.45 | 0.00 |
| 5-Jul-18 | 14.90 | 14.65 | 0.00 |
| 2-Aug-18 | 15.00 | 14.75 | 0.00 |
| 20-Sep-18 | 14.50 | 14.25 | 0.00 |
| 4-Oct-18 | 14.00 | 13.75 | 0.00 |
| 1-Nov-18 | 14.00 | 13.75 | 0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively quiet note today, with only few trades executed on some Apr – Aug maturities, as the CBN continued its OMO auction, which it resumed in the previous session. A total of N22bn of the 1-Mar and N107bn of the 23-Aug bills were sold by the CBN with stop rates dropping by 5bps to 13.10% and 14.90% respectively. The CBN has signaled its intention to continue its OMO T-bill interventions in order to moderate the amount of liquidity in the system. We consequently expect rates in the secondary market to trade around these levels (13% – 15%) in the near term.
| Table 2: OMO Auction Result | ||||
| Tenor | Rate (%) | Offer (NBn) | Sub (N’bn) | Sale (N’bn) |
| 72 day | 13.10 | 50.00 | 22.38 | 22.38 |
| 247 day | 14.90 | 100.00 | 107.34 | 107.34 |
Source: CBN
Money Market
The OBB and OVN rates rose higher to close today at 17.50% and 18.67%, due to the OMO T-bill sale of c.N129bn by the CBN in today’s session. System Liquidity is consequently estimated to close today at N42bn negative, from a positive opening figure of N90bn. We expect rates to moderate slightly in the coming days, due to expected inflows from FAAC and OMO T-bill maturities. This is however barring significant OMO interventions by the CBN in future sessions.
| Table 3: Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 12.33 | 3.75 |
| Overnight (O/N) | 13.25 | 4.33 |
Source: FMDQ, Zedcrest Research
FX Market
The CBN Official spot rate remained unchanged from its previous day rate of N306.20/$. Rates at the Investors and exporters FX window depreciated by 29k to close at N361.25/$. Rates at the parallel market however stayed flat at N363.50/$.
| Table 4: FX Rates | ||
| Current (N/$) | Previous (N/$) | |
| CBN Spot | 306.20 | 306.20 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 361.25 | 360.94 |
| Parallel Market | 363.50 | 363.50 |
Source: CBN, FMDQ, REXEL BDC
