Culled—Proshare
October 8, 2018/Anchoria AM Research
Money Market
The money market rate increased significantly last week as the Overnight rate (OVN) and Open Buy Back (OBB) rose to 22.50% and 20.86% respectively. Consequently, the average money market rate rose by 15.20% to settle at 21.68% due a decrease in system liquidity to close at cN76bn as a result of outflow of cN553bn from OMO Sales and Wholesale, Invisibles and SME FX auction of $210mn in spite of an inflow of cN278.37bn from OMO T-Bills Maturities during the week.
We expect rates to inch up on Monday as banks are expected to fund for another round of FX sales in the Wholesale, Invisibles and SME Market. Barring significant inflow during the week, the rate is expected to close the week higher.
| Instrument | 28/09/2018 | 05/10/2018 | Change |
| OBB | 6.00% | 20.86% | +14.86% |
| OVN | 7.17% | 22.50% | +15.33% |
Source: Anchoria AM Research, FMDQ OTC
Forex: USD/NGN
The CBN Official rate continued on its upward trend to close at N306.40/$, a 0.02% increment, while the rate in the Investors and Exporters’ FX Window fell by 0.03% to close at N363.82/$. Naira at the parallel market remained unchanged to close at N361.00/$ (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.
| 28/09/2018 | 05/10/2018 | Change | |
| CBN Official Rate | 306.35 | 306.40 | +0.02% |
| I&E FX Window | 363.92 | 363.82 | -0.03% |
| Everdon Rate | 361.00 | 361.00 | +0.00% |
Source: Anchoria AM Research, FMDQ OTC
Commodities
The Brent Crude oil and WTI Crude oil rose by 1.74% and 1.49% to close at $84.16 per barrel and $74.34 per barrel respectively. This is as a result of declines in Iranian exports due to pending U.S. oil sanctions and uncertainty surrounding the ability of other major oil producers to compensate for the shortfall from Iran.
Other factors include; strengthening of the US dollar; reduction in supply from Venezuela.
Fixed Income
Bond
The Bond market traded on a bullish note last week with yields falling across all maturities traded except 2024, 2027 and 2036 bonds. This is against the backdrop of increased buying interest from local participants on longer tenor bonds. The JUL 2034 bond was the most traded bond during the week with N46.85bn value traded respectively. Average yield fell by 13bps to close the week at 14.78%.
During the week, the following activities shaped investors sentiments: (a) Q4 Eurobond Launch; (b) FGN Bond Issuance Programme for Q4; (c) Anticipated second tranche of the FGN Sukuk Bonds.
Secondary Market
Source: Anchoria AM Research, FMDQ OTC
Treasury Bills
Due to decreased system liquidity and following T-bills and OMO auction during the week, the treasury bills market traded on a bearish note. Consequently, the average yield rose significantly by 7bps to close the week at 13.26%. Market activities were relatively quiet as the value of transactions fell to N1.02trillion from N1.08trillion in the previous week.
Primary Market Auction
Secondary Market
Source: Anchoria AM Research, FMDQ OTC
