Culled—Proshare

March 19, 2018/Zedcrest Capital

***CBN Fixes April 3 and 4 for MPC Meeting***

Bonds

The Bond market opened the week on a relatively quiet note with mixed sentiments observed across the curve, (slight buys on 20s, 27s and 36s, with slight sell on the 21s, 24s and 34s). Yields consequently compressed marginally by c.1bp on average, as investors continue to hover around our support yield level of c.13.50%. We expect slight sell tomorrow, in anticipation of renewed supply of bonds via the bond auction scheduled for Wednesday, combined with the relative apathetic interest in bonds by local clients with more interests in the higher yielding T-bills space. 

There will be a bond auction on Wednesday with N10bn of the 5 year, N30bn of a new 7 year and N30bn of the 10 year bonds on offer.

Treasury Bills

The T-bills market traded on a relatively flat note, as the CBN resumed its OMO interventions in the market, with a total sale of c.N111bn of the 1-Nov (227 day) bill. We expect this flattish trend to persist in the near term as the CBN is expected to continue to support the market via its regular OMO interventions. 

There will be an NTB auction on Wednesday with N5bn, N27bn and N22bn worth of 91, 182 and 364 day bills on offer.

Money Market

The OBB and OVN rates rose significantly higher to 22.50% and 25.00% respectively. This came on the backdrop of the Wholesale FX sales ($210m) and OMO T-bill sales (N111bn) by the CBN. System Liquidity is consequently estimated to close today at c.N40bn positive, having taken into account inflows from c.N87bn bond coupon payments to investors. We expect rates to remain slightly elevated as there are no significant inflows expected into the market tomorrow.

FX Market

The Interbank rate appreciated slightly by 0.02% to N305.70 from its previous rate of N305.75/$, with the CBN’s external reserves also recorded to have improved by 1.57% to $44.60bn as of 16 March. The NAFEX rate appreciated slightly by 0.03% to close at N360.45/$ while rates in the Unofficial market remained stable at N361.20/$.

Eurobonds

Investors were largely bearish on the NGERIA Sovereigns in today’s session, with slight sell offs witnessed especially on the long end of the curve (27s – 47s). Yields consequently rose by c.5bps to an average of 6.13%.

The Nigerian Banks though mostly quiet were also relatively bearish with slight uptick in yields especially on the Access 21s snr, FBNNL 21s and the Zenith and UBANL 22s. Investors were however bullish on the Diambk 19s, FBNNL 20s and Access 21s sub.

We note that investors bearish sentiments were largely driven by expectations of a rate hike by the FOMC in its meeting scheduled for tomorrow and next.