Culled—Proshare
October 9, 2018/Zedcrest Capital
***Buhari seeks NASS approval for $2.78bn Euro bonds***
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.23% | As at September14, 2018,9bps up from 11.14% recorded in July 2018. |
| MPR | 14.00% | Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting |
| External Reserves | $43.61bn | As atOctober8, 2018. A c.0.52% decrease from $43.84bnon October5, 2018 |
| Brent Crude | $84.78pb | As at October 9, 2018. A c.2.18% increasefrom$82.97pbon October 8, 2018 |
Bonds
The bond market traded on a relatively flat note in today’s session, with slight buying interests seen on the 26s and 37s, whilst we saw better sellers of the 36s. Yields consequently compressed marginally by c.1bp on average.
We expect yields to remain relatively stable in the near term, as the market remains largely driven by client interests. We however expect yields to trend higher towards month end, as market players price in expectations for renewed supply of bonds at the next FGN Bond Auction.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 13.93 | 13.64 | 0.00 |
| 14.50 15-Jul-21 | 14.97 | 14.56 | 0.00 |
| 16.39 27-Jan-22 | 14.50 | 13.69 | 0.00 |
| 14.20 14-Mar-24 | 15.01 | 14.80 | (0.01) |
| 12.50 22-Jan-26 | 14.81 | 14.70 | (0.05) |
| 16.29 17-Mar-27 | 15.15 | 14.97 | 0.00 |
| 13.98 23-Feb-28 | 15.21 | 15.13 | 0.00 |
| 12.15 18-Jul-34 | 15.24 | 15.12 | (0.01) |
| 12.40 18-Mar-36 | 15.25 | 15.01 | 0.05 |
| 16.2499 18-Apr-37 | 15.05 | 14.95 | (0.06) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained scantily traded, with yields compressing marginally by c.5bps on average. We however noted some profit taking on the longer end of the curve, in anticipation of another OMO auction on Thursday.
We expect some more profit taking activities and slight selloff as market players reposition ahead of the OMO auction expected by the CBN on Thursday.
| Benchmark FGN Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 1-Nov-18 | 13.15 | 12.75 | 0.15 |
| 6-Dec-18 | 13.10 | 12.65 | 0.10 |
| 3-Jan-19 | 12.50 | 12.15 | (0.25) |
| 14-Feb-19 | 12.65 | 12.50 | (0.25) |
| 14-Mar-19 | 13.00 | 12.40 | 0.30 |
| 4-Apr-19 | 12.50 | 12.25 | 0.00 |
| 18-Jul-19 | 13.00 | 12.35 | 0.00 |
| 1-Aug-19 | 13.00 | 12.50 | 0.00 |
| 12-Sep-19 | 13.10 | 12.80 | (0.15) |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates remained relatively stable, closing today at 9.17% and 10.00% as system liquidity remained buoyant at c.N244bn positive.
We expect rates to remain stable, with no significant outflows expected tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 9.17 | 9.50 |
| Overnight (O/N) | 10.00 | 10.58 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.40/$ (spot) and N361.34/$ (SMIS). At the I&E FX window a total of $106.40mn was traded in 252 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate appreciated by c.0.09% to N364.27/$ from N364.61/$ previously.
At the parallel market, the cash rate depreciated by 30k to N360.00/$, while the transfer rate remained stable at N363.00/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.45 | 306.45 |
| CBN SMIS | 361.34 | 361.34 |
| I&E FX Window | 364.27 | 364.61 |
| Cash Market | 360.00 | 359.70 |
| Transfer Market | 363.00 | 363.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA sovereigns maintained its recent bearish trend, with yields surging by c.8bps following moves by the Federal Govt to obtain approval for a fresh $2.78bn capital raise from the international market. We witnessed the most selloff on the 30-yr which lost c.1.50pct in price terms.
The NGERIA Corps were mostly quiet, except for slight interests seen on the DIAMBK 19s, which gained c.0.30pct on the day.
