Culled—-Proshare
16/11/2018/Zedcrest Capital
***BPE Begins Commercialisation of Four River Basin Devt Authorities***
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.28% | As at October 16, 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 | $41.62bn | As at November 15, 2018. A c.0.05% decrease from $41.64bn on November 14, 2018 |
| Brent Crude | $68.10pb | As at November 16, 2018. A c.1.57% decrease from $67.05pb on November 15, 2018 |
Bonds
The bond market closed on a relatively flat note, with slight interests still seen on the 2028s at c.15.83%. Yields were however higher by c.8bps w/w following a spike in yields earlier in the week.
In the coming week, we expect a slight uptick in yields, due to expectations for bearish signals from MPC and Inflation releases, coupled with expectations for a c.N115bn bond issuance by the DMO. Bargain Interests from clients should however keep yields subdued below the 16% mark in the near term.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 14.92 | 14.11 | (0.01) |
| 14.50 15-Jul-21 | 15.35 | 15.18 | (0.02) |
| 16.39 27-Jan-22 | 15.06 | 14.57 | 0.06 |
| 14.20 14-Mar-24 | 15.27 | 15.11 | 0.03 |
| 12.50 22-Jan-26 | 15.65 | 15.46 | (0.01) |
| 16.29 17-Mar-27 | 15.68 | 15.51 | 0.00 |
| 13.98 23-Feb-28 | 15.90 | 15.82 | (0.02) |
| 12.15 18-Jul-34 | 15.83 | 15.61 | 0.01 |
| 12.40 18-Mar-36 | 15.65 | 15.52 | 0.01 |
| 16.2499 18-Apr-37 | 15.60 | 15.50 | 0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market also remained relatively flat following the signifcant OMO sale by the CBN in the previous session. Yields were however higher by c.15bps w/w following slight selloff by market players prior to the NTB auction conducted earlier in the week.
In the coming week, we expect yields to maintain a slight uptrend, due to expectations for renewed OMO and FX interventions by the CBN.
| Benchmark FGN Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 6-Dec-18 | 12.60 | 11.40 | 0.00 |
| 3-Jan-19 | 13.00 | 12.45 | 0.00 |
| 14-Feb-19 | 13.00 | 12.80 | (0.20) |
| 14-Mar-19 | 13.15 | 12.70 | (0.10) |
| 4-Apr-19 | 12.95 | 12.45 | (0.05) |
| 18-Jul-19 | 13.00 | 12.70 | 0.00 |
| 1-Aug-19 | 13.60 | 13.25 | (0.05) |
| 12-Sep-19 | 14.50 | 14.35 | (0.15) |
| 3-Oct-19 | 14.55 | 14.30 | (0.10) |
Source: Zedcrest Dealing Desk
Money Market
The OBB and OVN rates remained relatively stable to close the week at 6.33% and 7.17% respectively, as system liquidity improved slightly to c.N300bn positive.
We expect rates to trend slightly higher opening next week, as market players are expected to fund for a Wholesale SMIS by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 6.67 | 5.75 |
| Overnight (O/N) | 7.33 | 6.42 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N306.70/$ (spot) and N360.85/$ (SMIS). At the I&E FX window a total of $108.17mn was traded in 352 deals, with rates ranging between N357.00/$ – N365.00/$. The NAFEX closing rate depreciated by c.0.03% to N364.01/$ from N363.90/$ previously.
At the parallel market segment, the cash and transfer rates depreciated further by 70k and 50k to N363.50/$ and N366.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.70 | 306.70 |
| CBN SMIS | 360.85 | 360.85 |
| I&E FX Window | 364.01 | 363.90 |
| Cash Market | 363.50 | 362.80 |
| Transfer Market | 366.00 | 365.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns closed the week on a bearish note, with yields now higher by c.45bps w/w, as market players were mostly bearish for most of the week in the wake of the c.$2.9bn Eurobonds sale by the FG at significantly higher rates.
In the NGERIA Corps, we saw interests mostly focused on the DIAMBK 19s which were sold off significantly higher in the previous week. Yields on the ticker are now lower by c.12% from their recent highs. We also witnessed slight interests on the FIDBAN 22s today, while the ACCESS 21s, FBNNL 21s and ZENITH 22s recorded decent gains for the week.
