Culled—Proshare
March 16, 2018/Zedcrest Capital
***Nigeria’s central bank aims for first rate meeting by April***- Emefiele
KEY INDICATORS
| Inflation | 14.33% | Declined by 0.80% in February from 15.13% in January 2018 |
| MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting of November 2017 |
| External Reserves | $44.20billion | Accreted 1.59% as at 13 March from $43.62bn as at 12 March 2018 |
| Brent Crude | $65.10pb | Rose by 0.95% from $64.49pb on 13 March 2018 |
Bonds
The bond market turned bearish in today’s session, reversing most of the yield declines witnessed in the previous two sessions. This came on the backdrop of a significant OMO auction by the CBN. Yields rose by c.15bps on average as market players priced in the relatively more attractive yield on the OMO bill sold at a c.16% yield. We expect continued support for yields at these levels, due to the CBN’s regular OMO interventions.
| Benchmark FGN Bond Yields | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 13.57 | 13.50 | 0.15 |
| 15.54 13-Feb-20 | 13.65 | 13.58 | 0.14 |
| 14.50 15-Jul-21 | 13.60 | 13.53 | 0.19 |
| 16.39 27-Jan-22 | 13.64 | 13.57 | 0.13 |
| 14.20 14-Mar-24 | 13.70 | 13.63 | 0.10 |
| 12.50 22-Jan-26 | 13.63 | 13.56 | 0.08 |
| 16.29 17-Mar-27 | 13.60 | 13.53 | 0.11 |
| 12.15 18-Jul-34 | 13.62 | 13.55 | 0.24 |
| 12.40 18-Mar-36 | 13.46 | 13.39 | 0.21 |
| 16.25 18-Apr-37 | 13.42 | 13.35 | 0.18 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills Market also traded on a bearish note with yields rising by c.15bps on average, due to the significant OMO sale of c.N444bn by the CBN. The 29-Nov bill offered is the longest tenured OMO bill on offer, even as the CBN retained the stop rate at 14.40%. We expect yields to inch slightly higher tomorrow, due to the relative squeeze in system liquidity and expected outflows for retail FX funding by banks.
| Benchmark Treasury Bill Yields | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 12-Apr-18 | 13.55 | 13.40 | 0.40 |
| 3-May-18 | 14.50 | 14.35 | 0.05 |
| 14-Jun-18 | 14.00 | 13.85 | 0.10 |
| 5-Jul-18 | 14.00 | 13.85 | 0.15 |
| 2-Aug-18 | 14.00 | 13.45 | 0.05 |
| 13-Sep-18 | 13.75 | 13.60 | 0.25 |
| 4-Oct-18 | 14.25 | 14.10 | 0.20 |
| 1-Nov-18 | 14.05 | 13.90 | 0.15 |
| 3-Jan-19 | 13.10 | 12.95 | 0.10 |
| 14-Feb-19 | 13.40 | 13.25 | 0.15 |
Source: Zedcrest Dealing Desk
| OMO Auction Result | ||||
| Tenor | Rate (%) | Offer (NBn) | Sub (N’bn) | Sale (N’bn) |
| 105 days | 12.60 | 100.00 | 0.02 | 0.02 |
| 259 days | 14.40 | 300.00 | 443.76 | 443.76 |
Source: CBN
Money Market
The OBB and OVN rates inched slightly higher to close at 6.67% and 7.50% respectively. This came on the back of a squeeze in system liquidity via the CBN’s OMO Sale of c.N444bn. System liquidity is consequently estimated to close today at c.N426bn, as inflows from OMO and PMA repayments offset most of the outflows for OMO sales. We expect rates to trend higher tomorrow, due to expected outflows for retail FX funding by banks.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 6.67 | 5.83 |
| Overnight (O/N) | 7.50 | 6.25 |
Source: FMDQ, Zedcrest Research
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 1.59% to $44.20bn as of 13 March. The NAFEX rate appreciated further by 0.05% to close at N360.06/$, with total volume traded rising by 121% to $282m, bolstered by some offshore inflow for the CBN’s OMO auction. Rates in the Unofficial market depreciated slightly by 0.03% to N361.20/$.
| FX Rates | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 305.75 | 305.75 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 360.25 | 360.28 |
| Parallel Market | 361.30 | 361.20 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns were well bided in today’s session with demand especially on the 27s, 32s and 47s, taking the curve lower by c.5bps on average.
We also witnessed strong interests in the Nigerian Corporate and Banks as investors bided for the DIAMBK 19s, Access 21s and FBNNL 21s, while there were bearish sentiments on the FIDBAN 18s and Zenith 22s. The Newly issued SEPLLN 23s also witnessed slightly favorable demand, with most bids slightly above 100, while it was last traded at 99.75 (9.312%).
Contact us:
Dealing Desk: 01-6311667 Dayo: 07032208237 Seyi: 08023231396 Nnamdi: +2348133385000
Email: research@zedcrestcapital.com
Disclaimer:
Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment research or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.
