Culled—Proshare
16/10/2018/Zedcrest Capital
***Inflation Rises Marginally to 11.28% in Sept. 2018 *** – NBS
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 | $43.00bn | As atOctober15, 2018. A c.0.60% decrease from $43.26bnon October12, 2018 |
| Brent Crude | $81.59pb | As at October 16, 2018. A c.1.34% increasefrom$80.51pbon October 15, 2018 |
Bonds
The bond market remained relatively flat in today’s session, with only slight buys seen on the 2028s which compressed yields marginally by c.1bp on average. This came on the back of a softer than expected inflation figure for the month of September, which ticked marginally higher by c.5bps on the back of rising food costs.
We expect the market to remain range bound in the near term, as market players are expected to maintain a relatively risk off stance ahead of the forthcoming Bond Auction.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 14.03 | 13.61 | (0.05) |
| 14.50 15-Jul-21 | 14.95 | 14.59 | 0.09 |
| 16.39 27-Jan-22 | 14.53 | 14.02 | (0.01) |
| 14.20 14-Mar-24 | 15.02 | 14.84 | 0.00 |
| 12.50 22-Jan-26 | 14.93 | 14.88 | (0.01) |
| 16.29 17-Mar-27 | 15.15 | 15.08 | (0.01) |
| 13.98 23-Feb-28 | 15.27 | 15.21 | (0.01) |
| 12.15 18-Jul-34 | 15.27 | 15.19 | 0.02 |
| 12.40 18-Mar-36 | 15.27 | 15.11 | (0.01) |
| 16.2499 18-Apr-37 | 15.12 | 14.97 | (0.09) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market was generally slightly bearish, with yields ticking higher by c.15bps on the back of expectations for the PMA tomorrow. We however noted signifcant demand for bills on the shorter end of the curve (Jan maturities), as market players priced in expectations for lower clearing rates on the tenor at tomorrow’s PMA.
Due to the relatively tight level of system liquidity, and expectations for a possible supply of the PMA bills at the next day’s OMO, we expect rates at the auction tomorrow to clear slightly above their previous levels.
| NTB PMA Expectations | |||
| Tenor | Offer (N’bn) | Expected Rate (%) | Previous Rate (%) |
| 91 days | 5.85 | 10.90 – 11.20 | 10.90 |
| 182 days | 29.25 | 12.00 – 12.30 | 12.10 |
| 364 days | 112.54 | 13.35 – 13.55 | 13.33 |
Benchmark FGN Treasury Bills
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 1-Nov-18 | 13.35 | 12.90 | (0.15) |
| 6-Dec-18 | 12.90 | 12.65 | 0.00 |
| 3-Jan-19 | 12.55 | 12.35 | 0.05 |
| 14-Feb-19 | 12.80 | 12.50 | (0.05) |
| 14-Mar-19 | 12.70 | 12.45 | (0.15) |
| 4-Apr-19 | 12.55 | 12.25 | 0.05 |
| 18-Jul-19 | 13.25 | 12.90 | 0.25 |
| 1-Aug-19 | 13.30 | 13.00 | 0.05 |
| 12-Sep-19 | 13.50 | 13.35 | 0.25 |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates, though declining slightly, remained elevated at 24.14% and 26.50% respectively, as system liquidity is estimated to be much unchanged from its opening levels of c.N50bnpositive.
We expect rates to remain to remain slightly above the 20% mark, as there are no significant inflows expected tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 24.14 | 39.92 |
| Overnight (O/N) | 26.50 | 44.33 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.45/$ (spot) and N362.52/$ (SMIS). At the I&E FX window a total of $198.71mn was traded in 367 deals, with rates ranging between N360.00/$ – N365.50/$. The NAFEX closing rate depreciated by c.0.11% toN364.33/$ from N363.92/$ previously.
At the parallel market, the cash rate depreciated by 20k to N360.20/$ while the transfer rates remained unchanged at N363.50/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.50 | 306.50 |
| CBN SMIS | 362.52 | 362.52 |
| I&E FX Window | 364.33 | 363.92 |
| Cash Market | 360.20 | 360.00 |
| Transfer Market | 363.50 | 363.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA sovereigns remained firmly in positive territory, with yields compressing further by c.4bps as investors continued with the recent bargain hunting across most of the maturities.
There were no noteworthy trades for us in the NGERIA Corps, except for mild axes on the FIDBAN 22s (sell) and SEPLLN 23s (buy).
