Culled—Proshare

November 26, 2018/Anchoria AM Research 

Money Market 

The money market rate decreased marginally last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 6.58% and 5.83% respectively. Consequently, the average money market rate fell by 0.55% to settle at 6.21% due to increased system liquidity to close at cN500bn.  Inflow for the week included: OMO bills maturity of c409bn. Outflow included: OMO sales of cN199.6bn and Wholesale, Invisible and SME FX auction of $210mn, Bond sales of cN39.52bn and biweekly retail auction.

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.

Source: Anchoria AM Research, FMDQ OTC

Forex: USD/NGN 

The CBN Official rate continued its upward trend to close at N306.75/$, with a 0.02% increase while the rate in the Investors and Exporters’ FX Window rose by 0.19% to close at N364.70/$.  The rate at the Bureau De Change remained unchanged to close at N364.50/$. 

In spite of constant intervention by the apex bank via its frequent Wholesale and Retail SMIS programme, we have seen a gradual and steady rise in the CBN official rate.

Source: Anchoria AM Research, FMDQ OTC

Commodities 

The Brent Crude oil and WTI Crude oil fell by 11.92% and 10.70% to close at $58.80 and $50.42 per barrel respectively, ahead of the Weekend Summit in Brussels and OPEC meeting scheduled for December 6, 2018. This represents seven weeks of a consecutive fall in the prices of the Crude Oil futures. 

Factors responsible for the continued bearish trend include:

1. a) Increase in Saudi Arabia’s crude oil production
2. b) US crude inventories rose for a ninth week last week – the longest run of gains since March 2017.

Fixed Income

Bond

Following the Bond Auction and Monetary Policy Committee Meeting, the Bond market witnessed some level of activity with demand well pronounced on 2034s and 2030s maturities. Consequently, the market closed on a bullish note, average yield fell by 8bps to close the week at 15.40%. 

The Bond Auction conducted during the week was undersubscribed with subscription rate of 89.30% this shows weaker appetite of participants to the auction. The FGN was able to raise N39.52 bn out of N115.00bn due to low subscription rate on 5 yrs and 7 yrs and demand for higher rate for the 10 yrs bond.

Bond Auction Results

Secondary Market

Source: Anchoria AM Research, FMDQ OTC 

Treasury Bills

Despite an increase in system liquidity during the week, the treasury bills market traded on a bearish note. Consequently, the average yield rose by 6bps to close the week at 14.06%. Market activities were relatively quiet as the value of transactions fell to N1.10 trillion from N1.41 trillion in the previous week due to public holiday observed on Tuesday.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC

Anchoria Research: +234 908 720 6076;  research@anchoriaam.com