Culled—Proshare
January 26, 2019/Zedcrest Capital
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.44% | As at January 16, 2019. A c.16bps increase from 11.28% recorded in November 2018 |
| MPR | 14.00% | Left Unchanged for the 13th Consecutive Time at the Jan. 22, 2019 MPC Meeting |
| External Reserves | $43.11bn | As at January 25, 2019. A c.0.02% decrease from $43.12bn on January 24, 2019 |
| Brent Crude | $61.56pb | As at January 25, 2019. A c.1.47% increase from $60.67pb on January 24, 2018 |
Bonds
The bond market closed the week on a positive note, as yields closed lower by c.5bps on average across the curve. Demand interests remained on the mid- & long-end as yields compressed on the 28s (-7bps) and 37s (-14bps) respectively, while there were smaller volumes traded on other maturities.
We however expect the market to open next week on a slightly bearish note, as market players take new positions ahead of the forthcoming auction.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.41 | 14.87 | (0.11) |
| 14.50 15-Jul-21 | 15.55 | 15.19 | (0.05) |
| 16.39 27-Jan-22 | 15.09 | 14.79 | (0.02) |
| 14.20 14-Mar-24 | 15.00 | 14.90 | 0.00 |
| 12.50 22-Jan-26 | 15.29 | 15.10 | (0.03) |
| 16.29 17-Mar-27 | 15.29 | 15.04 | 0.00 |
| 13.98 23-Feb-28 | 15.41 | 15.22 | (0.07) |
| 12.15 18-Jul-34 | 15.36 | 15.14 | (0.04) |
| 12.40 18-Mar-36 | 15.25 | 15.17 | (0.03) |
| 16.2499 18-Apr-37 | 15.19 | 15.13 | (0.14) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market closed the week on a calm note, as market focus remained on another OMO sale by the CBN. The Apex bank maintained stop rates at the auction while selling a total of N71.54bn across three (3) maturities on offer.
We expect yields to open the week higher due to expectations for continued OMO and FX interventions by the CBN.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Feb-19 | 13.50 | 12.00 | 0.45 |
| 14-Mar-19 | 13.00 | 11.00 | (0.05) |
| 4-Apr-19 | 13.00 | 11.60 | (0.05) |
| 2-May-19 | 12.10 | 11.90 | (0.10) |
| 13-Jun-19 | 13.00 | 12.00 | 0.00 |
| 18-Jul-19 | 13.30 | 13.15 | (0.20) |
| 1-Aug-19 | 13.65 | 13.30 | (0.05) |
| 12-Sep-19 | 14.50 | 14.15 | 0.05 |
| 3-Oct-19 | 14.85 | 14.60 | 0.05 |
| 14-Nov-19 | 14.90 | 14.80 | 0.00 |
| 5-Dec-19 | 14.95 | 14.80 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market remained relatively stable, despite another OMO sale of c.N71.54bn. System liquidity is estimated to close at c.N15bn from c.N86bn opening the day, with the OBB and OVN rates ending the session at 12.08% and 13.00% respectively.
We expect funding rates to open the week higher as market participants provide funding for the weekly Wholesale FX interventions by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 12.08 | 12.33 |
| Overnight (O/N) | 13.00 | 13.00 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N306.80/$ (spot) and N357.97/$ (SMIS). The NAFEX rate in the I&E window depreciated marginally by c.0.01% to N362.46/$. Cash and transfer rates in the parallel market however appreciated by c.0.55% and c.0.14% to N361.00/$ and N365.50/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.80 | 306.80 |
| CBN SMIS | 357.97 | 357.97 |
| I&E FX Window | 362.46 | 362.43 |
| Cash Market | 361.00 | 363.00 |
| Transfer Market | 365.50 | 366.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The bullish run on the NGERIA Sovereigns slowed down in today’s trading session, with yields compressing further by a single basis point on the average across the curve. Demand interests remained at the short- to mid-end of the curve, while yields on the longer end ticked slightly higher. The most interests were seen on the 2027 bond which compressed by c.9bps on the day.
The NGERIA Corps saw increased activity, as bids improved on the DIAMBK 19s and FBNNL 21s. We however witnessed slight sell interest on the ACCESS 21s Snr.
