Culled—-Proshare
22/10/2018/Zedcrest Capital
***Labour to Embark on Indefinite Strike over Minimum Wage***
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.28% | As at October16, 2018,5bps up from 11.23% recorded in August 2018. |
| MPR | 14.00% | Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting |
| External Reserves | $42.72bn | As atOctober19, 2018. A c.0.14% decrease from $42.78bnon October18, 2018 |
| Brent Crude | $79.78pb | As at October 22, 2018. A c.0.46% decrease from $80.15pb on October 19, 2018 |
Bonds
The bond market was largely order driven in today’s session, with sight sell witnessed on some short and mid tenured maturities which pushed the yield curve c.3bps higher on the day.
We expect the market to be relatively muted, as market players cautiously anticipate the forthcoming auction which is expected to clear slightly above its previous levels across the tenors on offer.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 14.19 | 13.59 | 0.08 |
| 14.50 15-Jul-21 | 15.02 | 14.70 | 0.09 |
| 16.39 27-Jan-22 | 14.73 | 14.20 | 0.04 |
| 14.20 14-Mar-24 | 15.09 | 14.96 | (0.06) |
| 12.50 22-Jan-26 | 15.03 | 14.96 | 0.10 |
| 16.29 17-Mar-27 | 15.16 | 15.08 | 0.05 |
| 13.98 23-Feb-28 | 15.33 | 15.25 | 0.03 |
| 12.15 18-Jul-34 | 15.33 | 15.28 | (0.01) |
| 12.40 18-Mar-36 | 15.29 | 15.13 | 0.00 |
| 16.2499 18-Apr-37 | 15.18 | 15.12 | (0.01) |
Source: Zedcrest Dealing Desk
Treasury Bills
Interests within the T-bills Space were largely focused on the short end of the curve (Nov – Jan) which compressed by c.30bps, as market players cherypicked on attractive rates (>c.12.50%) on that end, whilst they mainatined a risk off stance to maturities on the longer end, in anticipation of a further OMO Auction by the CBN later this week.
We expect the market to be slightly bearish in the build up to the OMO auction, as system liquidty is expected to tighten further, following a Wholesale SMIS by the CBN today.
| Benchmark FGN Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 1-Nov-18 | 13.15 | 12.55 | (0.25) |
| 6-Dec-18 | 12.90 | 12.55 | (0.20) |
| 3-Jan-19 | 13.10 | 12.65 | (0.20) |
| 14-Feb-19 | 13.00 | 12.80 | (0.40) |
| 14-Mar-19 | 12.90 | 12.65 | (0.35) |
| 4-Apr-19 | 12.90 | 12.50 | 0.20 |
| 18-Jul-19 | 13.50 | 13.20 | (0.10) |
| 1-Aug-19 | 13.70 | 13.10 | 0.00 |
| 12-Sep-19 | 13.80 | 13.75 | (0.15) |
| 3-Oct-19 | 13.75 | 13.55 | (0.05) |
Source: Zedcrest Dealing Desk
Money Market
In line with our expectations, the OBB and OVN rates trended higher by c.10bps, closing today at 20.00% and 22.29%, as market players reacted to funding pressures from the c.N75bn wholesale SMIS by the CBN.
We expect rates to remain elevated tomorrow, as there are no significant inflows expected.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 20.00 | 12.67 |
| Overnight (O/N) | 22.29 | 13.33 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the NGN/USDSpot rate depreciated by 0.02% to N306.55/$, while the SMIS rate remained unchanged at N362.52/$. At the I&E FX window a total of $244.69mn was traded in 275 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate depreciated marginally by c.0.02% toN364.09/$ from N364.02/$ previously.
At the parallel market, the cash rate depreciated significantly by 80k to N361.00/$, while the transfer rate remained unchanged at N364.00/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.55 | 306.50 |
| CBN SMIS | 362.52 | 362.52 |
| I&E FX Window | 364.09 | 364.02 |
| Cash Market | 361.00 | 360.20 |
| Transfer Market | 364.00 | 364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns were relatively mixed in today’s session, as market players were better buyers of the shorter tenured maturities, whilst remaining slightly bearish on the longer tenured bonds, with special focus on the 2032s and 2038s.
In the NGERIA Corps, we saw renewed interests on the DIAMBK 19s, ACCESS 21s Snr and SEPLLN 23s.
