Culled—Proshare
13/12/2018/Zedcrest Capital
***Oil slides again over doubts OPEC can avert glut***
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 | $42.80bn | As at December 11, 2018. A c.0.12% increase from $42.75bn on December 10, 2018 |
| Brent Crude | $59.71pb | As at December 13, 2018. A c.1.71% decrease from $60.75pb on December 12, 2018 |
Bonds
The FGN Bond market traded on a relatively flat note, but with slight interest on the 2028 and 2037 bond compressing yields marginally by c.1bp on average.
We expect the market to maintain its current flattish trend in the near term, as local players remain relatively risk off in tune with rising short term rates and political risk sentiments in the horizon.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.28 | 14.95 | 0.04 |
| 14.50 15-Jul-21 | 15.75 | 15.45 | 0.03 |
| 16.39 27-Jan-22 | 15.12 | 14.92 | (0.01) |
| 14.20 14-Mar-24 | 15.26 | 15.19 | (0.03) |
| 12.50 22-Jan-26 | 15.82 | 15.69 | (0.02) |
| 16.29 17-Mar-27 | 15.75 | 15.64 | 0.00 |
| 13.98 23-Feb-28 | 15.91 | 15.80 | (0.02) |
| 12.15 18-Jul-34 | 15.75 | 15.61 | 0.00 |
| 12.40 18-Mar-36 | 15.70 | 15.64 | (0.02) |
| 16.2499 18-Apr-37 | 15.54 | 15.51 | (0.06) |
Source: Zedcrest Dealing Desk
Treasury Bills
Yields in the T-bills market ticked slightly higher, as market players shed some holdings of short tenured bills due to the more attractive 364-day tenor on offer by the CBN at the OMO auction floated today. Market players bided for a total of c.N295bn of the N500bn offered, with most bids skewed to the 364-day (c.N258bn), and rates maintained at 11.90%, 13.50% and 15.00% on the 91, 182 and 364-day bills respectively.
We expect the CBN to maintain its pace of OMO interventions, whilst also noting the possibility for higher stop rates or direct mop ups (stab) due to continued under subscriptions by market players.
| Benchmark FGN Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 3-Jan-19 | 15.20 | 14.30 | 0.20 |
| 14-Feb-19 | 15.00 | 14.45 | 0.00 |
| 14-Mar-19 | 14.30 | 13.70 | (0.20) |
| 4-Apr-19 | 14.35 | 12.85 | 0.05 |
| 2-May-19 | 13.75 | 13.25 | 0.00 |
| 18-Jul-19 | 13.55 | 13.25 | 0.00 |
| 1-Aug-19 | 14.00 | 12.75 | 0.00 |
| 12-Sep-19 | 14.95 | 14.25 | (0.05) |
| 3-Oct-19 | 15.10 | 14.90 | 0.00 |
| 14-Nov-19 | 15.10 | 14.80 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market moderated significantly by c.40pct to 16.50% and 17.25%, as system liquidity (which was hitherto in a net negative position of c.N144bn) was significantly bolstered by inflows from OMO and PMA repayments (c.550bn). With total OMO sale of c.N295bn, we estimate system liquidity to be at c.N110bn positive as at COB today.
Rates are expected to close the week slightly higher, with CBN expected to conduct a further OMO auction tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 16.50 | 56.67 |
| Overnight (O/N) | 17.25 | 62.50 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained stable at N306.90/$ (spot) and N359.24/$ (SMIS). At the I&E FX window, the NAFEX closing rate depreciated by c.0.06% to close at N365.00/$ from N364.77/$ previously.
At the parallel market, the cash and transfer rate depreciated by 0.06% and 0.55% to N362.20/$ and N368.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.90 | 306.90 |
| CBN SMIS | 359.24 | 359.24 |
| I&E FX Window | 365.00 | 364.77 |
| Cash Market | 362.20 | 362.00 |
| Transfer Market | 368.00 | 366.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns maintained a 3-day rally which has now culminated in a c.25bps gain across the curve. Risk cleared today across most maturities, with market players specifically favouring the new issues.
In the NGERIA Corps, investors renewed demand for the DIAMBK 19s and ACCESS 21s Sub, whilst sentiments dampened on the Access 21s Snr and UBANL 22s.
