Culled—Proshare
May 3, 2018/Zedcrest Capital
***Nigeria, China sign $2.5bn currency swap deal***
Bonds
The bond market opened on a relatively quiet note, but turned slightly bearish following release of the OMO auction results which showed a significant sale of c.N600bn at a 5bps higher rate. Yields consequently retraced slightly by c.6bps, as market players have begun to speculate on a continued hike in OMO auction rates by the CBN. We expect the market to remain slightly bearish tomorrow, due to relatively weak demand for bonds and risk off sentiments by market players.
Treasury Bills
The T-bills market also witnessed slight retracements following the OMO auction announcement by the CBN with a relatively significant amount of N500bn on offer. The CBN eventually sold c.N600bn of the 105 and 245-day bills at 11.00% and 12.10% respectively, with subscription on the latter prorated by c.50%. This consequently pushed yields higher especially on the Aug and Nov maturities. We expect the market to remain slightly bullish, due to pent up demand for treasury bills in the market.
Money Market
The OBB and OVN rates inched higher to 4.42% and 5.00%, its highest in 4weeks. This was following the significant OMO T-bill Sale of c.N600bn, which was slightly offset by c.N400bn in OMO T-bill, PMA and Stab Sec maturities. System liquidity is consequently estimated at c.N200bn positive as at COB today. We expect rates to close the week on a stable note, barring another OMO auction by the CBN, which is largely unexpected.
FX Market
The Interbank rate remained stable at its previous rate of N305.70/$, with the CBN’s external reserves recorded to have improved by 1.54% to $47.36bn. The NAFEX rate appreciated slightly by 0.04% to N360.67/$, while rates in the Unofficial market remained stable at N361.50/$.
Eurobonds
The NGERIA Sovereigns stayed relatively calm in today’s session, with slight recoveries witnessed on the longer end of the curve, following huge amounts of selloff witnessed in previous sessions. The 2047s gained c.0.50pt, having last traded 97.78 and now trading 97.50/98.50. We note that the US FED kept rates unchanged at its FOMC whilst maintaining a slightly dovish stance in its comments on inflation, and economic growth potential, consequently strengthening an expected 3-rate hike bias instead 4. We consequently expect slight recoveries in the EM space and believe current levels present good buying opportunities in the near term.
The NGERIA Corps were relatively quiet, but with slight bearish sentiments on the longer tenured tickers (the Zenith, UBANL and FIDBAN 22s). The SEPLLN 23s were are also traded lower, last trades seen at 101.15, now trading 100.75/101.50.
The Angola 10 and 30-yr bonds were finally sold at 8.25% and 9.375% respectively, with $1.75bn and $1.25bn sold on the 10 and 3o-yr out of a total subscription of c.$9bn. Last mkt quotes seen at 100/100.50 (28s) and 100.80/101.20 (48s).
