Culled—Proshare
February 1, 2019/Zedcrest Capital
***NIRSAL unveils national MFB***
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 | $43.17bn | As at January 31, 2019. A c.0.01% decrease from $43.18bn on January 30, 2019 |
| Brent Crude | $61.98pb | As at February 1, 2019. A c.0.11% decrease from $62.05pb on January 31, 2019 |
Bonds
The Bond market rallied by c.20bps in today’s session largely driven by renewed demand from offshore investors and the relative undersupply of bonds in the market. Average bond yields consequently broke the 15% support level to close at c.14.96% from c.15.16% previously.
We expect this trend to persist as offshore investors reallocate funds to EM assets in view of the slightly more dovish stance by the US Fed and relative ease in the dollar strength both making a case for renewed demand for attractive EM assets. We however expect the peculiarity of the political risks in Nigeria to weigh on demands interests in the near term.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 14.98 | 14.45 | (0.22) |
| 14.50 15-Jul-21 | 14.99 | 14.76 | (0.38) |
| 16.39 27-Jan-22 | 14.89 | 14.28 | (0.10) |
| 14.20 14-Mar-24 | 14.82 | 14.33 | (0.16) |
| 12.50 22-Jan-26 | 15.07 | 14.72 | (0.20) |
| 16.29 17-Mar-27 | 14.98 | 14.90 | (0.20) |
| 13.98 23-Feb-28 | 15.09 | 15.00 | (0.16) |
| 12.15 18-Jul-34 | 14.84 | 14.59 | (0.39) |
| 12.40 18-Mar-36 | 15.01 | 14.79 | (0.09) |
| 16.2499 18-Apr-37 | 14.96 | 14.65 | (0.14) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market remained slight bullish in today’s session, with yields moderating marginally by c.5bps as the CBN held off on its frequent OMO auctions consequently spurring slight buying interests across the curve.
We expect yields to remain relatively flat opening the new week, as the CBN is expected to resume with its OMO and Wholesale FX auctions.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Feb-19 | 13.00 | 12.50 | 0.00 |
| 14-Mar-19 | 12.75 | 12.00 | 0.00 |
| 4-Apr-19 | 12.75 | 12.05 | 0.00 |
| 2-May-19 | 11.75 | 11.50 | 0.00 |
| 13-Jun-19 | 12.70 | 12.00 | (0.10) |
| 18-Jul-19 | 13.50 | 12.00 | 0.00 |
| 1-Aug-19 | 13.50 | 13.25 | 0.00 |
| 12-Sep-19 | 14.60 | 14.50 | 0.00 |
| 3-Oct-19 | 14.85 | 14.60 | 0.00 |
| 14-Nov-19 | 14.95 | 14.75 | 0.00 |
| 5-Dec-19 | 15.00 | 14.85 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market remained relatively unchanged from previous levels as system liquidity remained robust at c.N250bn positive, having accounted for outflows for Bond auction settlement and retail FX funding. The OBB and OVN rates consequently ended the session at 11.07% and 11.86% respectively.
We expect rates to inch slightly higher opening next week, as the CBN is expected to resume its OMO and wholesale FX interventions consequently tightening system liquidity.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 11.07 | 10.29 |
| Overnight (O/N) | 11.86 | 11.36 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N306.75/$ (spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window appreciated further by c.0.08% to N362.71/$. At the parallel market, the cash rate appreciated further by c.0.09% to N357.80/$, while the transfer rate remained unchanged at N365.00/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.75 | 306.75 |
| CBN SMIS | 357.10 | 357.10 |
| I&E FX Window | 362.71 | 363.03 |
| Cash Market | 357.80 | 358.00 |
| Transfer Market | 365.00 | 365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns traded on a much quieter note following the rally in the previous session. Yields were consequently flat on the day, as bids remained firm at previous levels.
In the NGERIA Corps, investors showed renewed interests on the DIAMBK 19s, Access 21s and FBNNL 21s.
