Culled—Proshare
April 26, 2018/ Zedcrest Capital
***Minimum wage fireworks begins Thursday with public hearing***
KEY INDICATORS
| Inflation | 13.34% | Declined by 0.99% in March from 14.33% in February 2018 |
| MPR | 14.00% | Left unchanged at 14.00% at the MPC meeting 0n 4 April 2018 |
| External Reserves | $47.01billion | Accreted 1.52% as at 16 April from $46.92bn as at 13 April 2018 |
| Brent Crude | $73.16pb | Fell by 1.00% from $73.90pb on 24 April 2018 |
Bonds
The Bond market opened on a slightly weaker note, but strengthened over the course of trading as market players cherry-picked on the medium to long end of the curve (24s – 37s), which were traded down to c.12.85 – 12.75 pct., in anticipation of lower clearing rates at the FGN bond auction. Yields consequently compressed by c.5bps, with very little action observed on the shorter end of the curve. We expect the market to open slightly stronger tomorrow due to the huge amount of lost bids at the auction which cleared at 2.9X bid to cover.
| FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 16.00 29-Jun-19 | 11.28 | 9.98 | (0.01) |
| 15.54 13-Feb-20 | 11.89 | 11.36 | 0.05 |
| 14.50 15-Jul-21 | 12.75 | 12.19 | 0.22 |
| 16.39 27-Jan-22 | 12.68 | 11.88 | (0.07) |
| 14.20 14-Mar-24 | 12.88 | 12.81 | (0.15) |
| 12.50 22-Jan-26 | 13.10 | 12.71 | (0.04) |
| 16.29 17-Mar-27 | 12.93 | 12.86 | (0.15) |
| 12.15 18-Jul-34 | 12.98 | 12.90 | (0.13) |
| 12.40 18-Mar-36 | 12.86 | 12.68 | (0.12) |
| 16.25 18-Apr-37 | 12.92 | 12.73 | (0.07) |
Source: Zedcrest Dealing Desk
FGN Bond Auction Result
| Maturity | Rate (%) | Offer (N’bn) | Sub (N’bn) | Sale (N’bn) |
| Apr-23 | 12.75 | 30.00 | 52.89 | 38.29 |
| Mar-25 | 12.85 | 30.00 | 49.40 | 12.75 |
| Feb-28 | 12.89 | 30.00 | 160.19 | 38.96 |
Source: DMO
Treasury Bills
The T-bills market traded on a relatively flat note, with yields ticking slightly higher by c.7bps on the short and medium end of the curve, as market players slightly improved on their offers in anticipation of an OMO auction by the CBN tomorrow. We expect the market to be relatively muted in tomorrow’s session, barring a surprise Non-OMO issuance by the CBN.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Jun-18 | 10.30 | 8.80 | (0.20) |
| 5-Jul-18 | 11.00 | 9.50 | 0.00 |
| 2-Aug-18 | 10.60 | 9.60 | (0.20) |
| 13-Sep-18 | 11.00 | 10.75 | 0.00 |
| 4-Oct-18 | 10.60 | 10.35 | (0.10) |
| 1-Nov-18 | 11.25 | 10.75 | (0.35) |
| 6-Dec-18 | 11.25 | 11.00 | 0.05 |
| 3-Jan-19 | 11.80 | 10.50 | 0.00 |
| 14-Feb-19 | 11.80 | 10.30 | (0.10) |
| 14-Mar-19 | 11.50 | 10.30 | (0.20) |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates remained stable at 2.83% and 3.00% respectively. This was as there were no pressures on system liquidity estimated to be relatively unchanged at c.N400bn positive. We expect inflows from OMO T-bill maturities (c.N267bn) and retail FX refunds (c.N150bn) to keep rates relatively stable tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 2.83 | 2.58 |
| Overnight (O/N) | 3.00 | 3.00 |
Source: FMDQ, Zedcrest Research
FX Market
The Interbank rate remained stable at its previous rate of N305.65/$, with the CBN’s external reserves recorded to have improved by 1.53% to $47.01bn as at 16-April. The NAFEX rate depreciated by 0.15% to N360.51/$, while rates in the Unofficial market however remained stable at N361.40/$.
| FX Rates | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 305.65 | 305.65 |
| CBN SMIS | 330.00 | 330.00 |
| I&E FX Window | 360.51 | 360.00 |
| Parallel Market | 361.40 | 361.40 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns fell back into negative territory, as investors turned bearish on bonds across the SSA space, following further uptick in USTs, with the 10yr now above 3%. We witnessed the most sell on the 30-yr 2047 bonds which lost as much as 2pts, down now to 101.30/101.90.
The NGERIA Corps also turned bearish, with investors selling off across all tickers, mostly on the FBNNL21s and the Zenith and UBANL 22s. The SEPLLN 23s also traded a touch lower at 101.375, now trading wider at 101.35/102.15.
