Culled—Proshare

September 24, 2018/Anchoria AM Research 

Money Market 

The money market rate decreased last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 4.75% and 4.00% respectively. Consequently, the average money market rate decreased by 6.96% to settle at 4.38% due to increase in system liquidity to close at cN480bn as a result of inflow from Coupon Payment on the March 2036 Bond of cN41.00bn, OMO T-bills maturity of cN218.59bn and Paris Club refunds to States of cN470.00bn despite outflow from OMO sales of cN337.59bn and Wholesale, Invisibles and SME FX auction of $210mn. 

We expect rates to inch up on Monday as banks are expected to fund for another round of FX sales in the Wholesale, Invisibles and SME Market. Barring significant inflow during the week, the rate is expected to close the week higher.

Source: Anchoria AM Research, FMDQ OTC 

Forex: USD/NGN

The CBN Official rate and the rate in the Investors and Exporters’ FX Window continued on its upward trend to close at N306.30/$ and N363.68/$ with 0.02% and 0.14% increase respectively. Naira at the parallel market inched up by 0.14% to close at N361.00/$ (using the Everdon BDC Rate). 

We expect rates in the parallel market to remain constant as the apex bank continues to supply FX into the market coupled with its frequent Wholesale and Retail SMIS programme.

Source: Anchoria AM Research, FMDQ OTC 

Commodities 

The Brent Crude oil and WTI crude oil rose by 0.91% and 2.59% to close at $78.80 per barrel and $70.78 per barrel respectively as effective date of US sanctions on Iran approaches and as US Oil rigs fell by 1. 

During the week U.S. President Donald Trump resumed his criticism of OPEC, saying on Twitter that the cartel “must get prices down now!” 

Fixed Income

Bond

The Bond market traded on a bullish note last week with yields falling across all maturities except 2024 and 2028 bonds. This is against the backdrop of increased buying interest from local participants (Pension Fund Administrators and Asset Managers). The APR 2037 and JUL 2034 bonds were the most traded bonds during the week with N48.05bn and N43.40bn value traded respectively. Average yield fell by 21bps to close the week at 15.06%. 

The week ahead, we expect the following activities to shape investors sentiments: a) Central bank of Nigeria’s Monetary Policy Committee decision (24 – 25 Sept 2018); b) US FOMC Meeting on 25 -26 Sept 2018; c) Bond Auction on 26 Sept 2018.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC 

Treasury Bills 

Due to increased system liquidity and increased buying interest during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell significantly by 167bps to close the week at 12.77%. Market activities were relatively active as value of transactions rose to N1.51trillion from N1.44trillion in the previous week.

T-bill Auction result

Secondary Market

Source: Anchoria AM Research, FMDQ OTC