Culled—Proshare
December 5, 2018/Zedcrest Capital
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.26% | As at November 21, 2018. A c.2bps down from 11.28% recorded in September 2018 |
| MPR | 14.00% | Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting |
| External Reserves | $42.33bn | As at December 3, 2018. A c.0.38% increase from $42.17bn on November 30, 2018 |
| Brent Crude | $62.07pb | As at December 4, 2018. A c.0.21% increase from $61.94pb on December 3, 2018 |
Bonds
Sentiments in the Bond market remained bearish, as investors stay risk-off especially on the short-end of the curve. Higher yields on T-bills continues to lure investors in the interim as the Fixed Income yield curve remains inverted.
We expect the market to remain weak as market participants’ price in expected supply from the December FGN bond auction as well as the DMO plans to issue N100bn 7-year Sukuk Bonds later this month.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.00 | 14.53 | 0.00 |
| 14.50 15-Jul-21 | 15.63 | 15.32 | 0.05 |
| 16.39 27-Jan-22 | 14.93 | 14.53 | 0.00 |
| 14.20 14-Mar-24 | 15.30 | 15.11 | 0.00 |
| 12.50 22-Jan-26 | 15.84 | 15.70 | 0.03 |
| 16.29 17-Mar-27 | 15.84 | 15.71 | 0.01 |
| 13.98 23-Feb-28 | 16.00 | 15.88 | 0.01 |
| 12.15 18-Jul-34 | 15.80 | 15.59 | 0.01 |
| 12.40 18-Mar-36 | 15.80 | 15.65 | 0.03 |
| 16.2499 18-Apr-37 | 15.75 | 15.66 | (0.01) |
Source: Zedcrest Dealing Desk
Treasury Bills
Activity in secondary market for T-bills continue to take a back seat as the market digest the daily supply of OMO T-bills issued by the Central Bank of Nigeria (CBN). Volumes traded remained low, as yields remained largely unchanged across the NTB curve.
For the fourth trading session in a row, the CBN sold a total of N94.50bn across three maturities on offer. The Apex bank made no change once again to the stop rates on the mid- (191-day) and long-end (324-days) bills at 13.50% and 15.00% respectively, while there was no sale on the short-end (93-day) maturity offered.
We maintain our cautious outlook on T-bills, as expectations for yields to trend upwards remain due to reduced system liquidity levels and expectations for continued OMO supply as the week progresses.
| OMO Auction Result | ||||
| Tenor | Rate (%) | Offer (₦’bn) | Sub (₦’bn) | Sale (₦’bn) |
| 93-days | Nil | 50.00 | Nil | Nil |
| 191-days | 13.50 | 50.00 | 10.77 | 10.77 |
| 324-days | 15.00 | 150.00 | 83.73 | 83.73 |
| Benchmark FGN Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 3-Jan-19 | 14.00 | 13.20 | 0.00 |
| 14-Feb-19 | 14.00 | 13.75 | 0.00 |
| 14-Mar-19 | 13.30 | 13.00 | 0.00 |
| 4-Apr-19 | 14.00 | 12.85 | 0.00 |
| 2-May-19 | 14.00 | 12.75 | 0.00 |
| 18-Jul-19 | 13.80 | 12.75 | 0.00 |
| 1-Aug-19 | 14.10 | 13.70 | 0.00 |
| 12-Sep-19 | 15.00 | 14.40 | 0.10 |
| 3-Oct-19 | 14.90 | 14.60 | (0.05) |
| 14-Nov-19 | 15.00 | 14.50 | 0.05 |
Source: Zedcrest Dealing Desk
Money Market
Despite the CBN’s attempt to stem the excess liquidity via the sale of OMO securities (c.N94.50bn), money market rates closed slightly higher at 8.67% (from 6.67%) and 9.50% (from 7.67%) for Open Buy-Back (OBB) and overnight (O/N) respectively. System liquidity is consequently estimated at c.N187bn as at close of business today.
We expect funding rates to tick slightly higher tomorrow as the CBN is expected to continue its aggressive liquidity mop up exercise via OMO auctions.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 8.67 | 6.67 |
| Overnight (O/N) | 9.50 | 7.67 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank market, the Naira/USD rate remained unchanged to close at N306.85/$ (spot) and N359.81/$ (SMIS). Value traded at the I&E FX window picked up today with a total trade turnover of $208.15m traded in 293 deals, with rates ranging between N358.00/$ – N365.65/$. The NAFEX closing rate depreciated by c.0.17% to close at N364.63/$ from N364.00/$ previously.
Rates remained calm at the parallel markets, with both cash and transfer rates remaining stable to close at N368.00/$ & N372.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.85 | 306.85 |
| CBN SMIS | 359.81 | 359.81 |
| I&E FX Window | 364.63 | 364.00 |
| Cash Market | 368.00 | 368.00 |
| Transfer Market | 372.00 | 372.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereign Eurobonds traded slightly weaker as talks of oil production cuts unsettled the Sub-Saharan Africa space. Volume of trades increased on the day, as yields ticked higher by c.7bps on the average across the curve.
The NGERIA Corps continued to enjoy positive sentiments across some tracked tickers, yields compressed further following investor demand. The ACCESS 21s Subs and DIAMBK 19s continued lead the market, as demand interests pushed yields on the papers lower by c36bps and c.251bps respectively.
