Culled—-Proshare
February 1, 2018/Zedcrest Capital
***Business activities fall as PMI drops to 57.3*** – CBN
KEY INDICATORS
| Inflation | 15.37% | Declined by 0.54% in December from 15.90% in November 2017 |
| MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting of November 2017 |
| External Reserves | $40.63billion | Accreted 1.75% as at 30th January from $40.56 as at 29th January 2017 |
| Brent Crude | $69.57pb | Rose by 1.83% from $68.32pb on 31st January 2018 |
Bonds
The bond market remained scantily traded in today’s session. We however witnessed slight sell towards the close of trading, especially on the 2034 bond, consequently taking yields c.4bps higher than their previous levels. We expect this slightly bearish trend to persist in the near term, due to dullish trading bias and clients’ preference and expectations for higher yielding instruments in T-bills and corporate bond space.
| Benchmark FGN Bond Yields | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 13.69 | 13.62 | 0.02 |
| 15.54 13-Feb-20 | 13.53 | 13.46 | 0.00 |
| 14.50 15-Jul-21 | 13.30 | 13.23 | 0.12 |
| 16.39 27-Jan-22 | 13.13 | 13.06 | 0.04 |
| 14.20 14-Mar-24 | 13.48 | 13.41 | 0.07 |
| 12.50 22-Jan-26 | 13.50 | 13.43 | 0.03 |
| 16.29 17-Mar-27 | 13.47 | 13.40 | 0.07 |
| 12.15 18-Jul-34 | 13.47 | 13.40 | 0.07 |
| 12.40 18-Mar-36 | 13.36 | 13.29 | 0.01 |
| 16.25 18-Apr-37 | 13.33 | 13.26 | 0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a slightly bullish note as the market was awash with liquidity from the OMO and Stab SEC maturities. The CBN however offered N350bn OMO T-bills, consequently selling the total amount of N215bn subscribed for by market players, to mop up the excess system liquidity. We expect the market to be relatively quiet tomorrow, as funding for retail FX by banks is expected to weigh on system liquidity.
| Benchmark Treasury Bills Rates | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 1-Mar-18 | 12.50 | 12.35 | 0.00 |
| 5-Apr-18 | 13.75 | 13.60 | (0.20) |
| 3-May-18 | 13.35 | 13.20 | (0.05) |
| 14-Jun-18 | 14.30 | 14.15 | (0.10) |
| 5-Jul-18 | 14.05 | 13.90 | 0.00 |
| 2-Aug-18 | 13.55 | 13.40 | (0.15) |
| 20-Sep-18 | 14.20 | 14.05 | (0.05) |
| 4-Oct-18 | 14.35 | 14.20 | 0.00 |
| 1-Nov-18 | 13.75 | 13.60 | 0.00 |
| 3-Jan-19 | 13.70 | 13.55 | 0.00 |
Source: Zedcrest Dealing Desk
| OMO Auction Result | ||||
| Tenor | Rate (%) | Offer (NBn) | Sub (N’bn) | Sale (N’bn) |
| 98 day | 12.60 | 100.00 | 5.00 | 5.00 |
| 266 day | 14.40 | 350.00 | 210.42 | 210.42 |
Source: CBN
Money Market
The OBB and OVN rates declined to 3.83% and 4.83% as inflows of c.N296bn OMO and Stab SEC maturities bolstered system liquidity to over N600bn long. System liquidity is however estimated to close lower at c.N388bn following the OMO sales by the CBN. We expect rates to close slightly higher tomorrow, due to funding for retail FX bids by banks.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 3.83 | 4.83 |
| Overnight (O/N) | 4.67 | 5.25 |
Source: FMDQ, Zedcrest Research
FX Market
The CBN Official spot rate depreciated by 0.02% to N305.75/$ from its previous day rate of N305.70/$, with the CBN’s external reserves recorded to have improved by 1.75% to $40.63bn as at 30th January 2018.
The spot rate in the Investors and Exporters’ FX Window depreciated by 0.16% to close at N360.57/$ from N360.00/$.
Rates in the Unofficial market appreciated by 0.22% to N361.50/$
| FX Rates | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 305.75 | 305.70 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 360.57 | 360.00 |
| Parallel Market | 361.50 | 362.30 |
Source: CBN, FMDQ, REXEL BDC
