Culled—Proshare

March 14, 2018/Zedcrest Capital

*** Nigerian inflation slows for 13th consecutive month in February***

Bonds

The Bond market remained slightly bullish in today’s session, but in a less aggressive manner than in the previous session. This was as the initial bullish bias following the significant decline in the Y/Y February inflation released by the NBS got slightly moderated by some profit taking by market players. Yields consequently compressed by c.4bps on average, with demand skewed towards the shorter tenured maturities. We expect yields to decline just slightly tomorrow, as yields are expected to find support close to current levels. 

Treasury Bills

The T-bills market was also bullish on the back of liquidity inflows into the system. The PMA today was significantly oversubscribed at 4.04X the offered amount on the 364-day maturity, forcing the DMO to shift volumes from the 182-day which was 0.26X undersubscribed. We expect yields to decline further tomorrow on the back of expected inflows from OMO T-bill and PMA repayments. We however expect the bullish sentiment to be moderated by an OMO intervention by the CBN, as the apex bank would be looking to moderate the level of liquidity in the system.

Money Market

The OBB and OVN rates fell to 5.83% and 6.25% respectively, as inflows from retail FX refunds and bond coupon payments bolstered system liquidity to c.N250bn long. We expect rates to decline further tomorrow, due to expected inflows (c.N360bn) from OMO and PMA repayments.

FX Market

The Interbank rate remained stable at its previous rate of N305.75/$, with the CBN’s external reserves also recorded to have improved by 1.60% to $43.73bn as of 9 March. The NAFEX rate appreciated marginally by 0.01% to close at N360.25/$, with total volume traded declining further downward by 60.33% to $128m. Rates in the Unofficial market appreciated slightly by 0.03% to N361.30/$.

Eurobonds

There were slight interests in the NGERIA sovereigns in today’s session, with slight buys on the 30s, 38s and 27s, taking the yield curve slightly lower by c.2ps on average.

The Nigerian Corporate and banks were mostly quiet. We however witnessed slight hits on the newly issued SEPLLN 23s at 99.80 (9.299%).