Culled—Proshare
February 6, 2019/Zedcrest Capital
*** NNPC records N2.06b trading surplus in Nov 2018***
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 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting |
| External Reserves | $43.04bn | As at February 4, 2019. A c.0.30% decrease from $43.17bn on February 2, 2019 |
| Brent Crude | $62.16pb | As at February 5, 2019. A c.1.24% decrease from $62.94pb on February 4, 2019 |
Bonds
The Bond market traded flat in today’s session, with yields compressing marginally by c.2bps on the day. Demand interests have been constrained by expectations for a slight uptick in yields ahead of the elections and bond auction later this month.
Market players appear to be currently unsatisfied with yields at sub-15% levels and we consequently expect yields to remain relatively flat given the dearth of supply in the market.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.09 | 14.45 | (0.05) |
| 14.50 15-Jul-21 | 15.09 | 14.81 | (0.03) |
| 16.39 27-Jan-22 | 14.88 | 14.34 | (0.02) |
| 14.20 14-Mar-24 | 14.73 | 14.47 | (0.07) |
| 12.50 22-Jan-26 | 14.86 | 14.75 | 0.01 |
| 16.29 17-Mar-27 | 15.04 | 14.90 | (0.02) |
| 13.98 23-Feb-28 | 15.14 | 15.05 | (0.02) |
| 12.15 18-Jul-34 | 15.00 | 14.83 | 0.04 |
| 12.40 18-Mar-36 | 15.01 | 14.85 | (0.01) |
| 16.2499 18-Apr-37 | 14.95 | 14.81 | (0.06) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market turned slightly bearish in today’s session, with yields retracing higher by c.10bps, on the back of a further OMO auction by the CBN. The short covering momentum in the market resulted in significant demand at the CBN’s OMO auction which was oversubscribed by c.153%, with total sale of c.N122bn of the N80bn offered. Stop rates were however maintained across all tenors.
We expect yields to inch slightly higher tomorrow due to the relative squeeze in system liquidity from the persistent OMO auction by the CBN.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Feb-19 | 13.05 | 12.15 | 0.00 |
| 14-Mar-19 | 12.75 | 11.50 | 0.15 |
| 4-Apr-19 | 13.05 | 12.00 | 0.25 |
| 2-May-19 | 12.65 | 11.70 | 0.95 |
| 13-Jun-19 | 13.05 | 11.50 | 0.55 |
| 18-Jul-19 | 13.75 | 12.90 | 0.75 |
| 1-Aug-19 | 13.75 | 13.20 | 0.45 |
| 12-Sep-19 | 14.70 | 14.15 | 0.15 |
| 3-Oct-19 | 14.85 | 14.50 | 0.20 |
| 14-Nov-19 | 14.85 | 14.60 | 0.00 |
| 5-Dec-19 | 15.00 | 14.80 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market trended higher by c.3pct as system liquidity was mopped up by a c.N122bn OMO sale by the CBN. The OBB and OVN rates consequently ended the session at 19.50% and 20.92% respectively.
We expect rates to remain elevated as there are no significant inflows expected tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 19.50 | 16.83 |
| Overnight (O/N) | 20.92 | 17.77 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the CBN strengthened the spot rate by c.0.02% to N306.70/$, while the SMIS rate remained unchanged at N357.10/$ (SMIS). The NAFEX rate in the I&E window appreciated further by c.0.08% to N362.19/$, while the cash and transfer rates at the parallel market remained unchanged at N357.80/$ and N364.50/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.70 | 306.75 |
| CBN SMIS | 357.10 | 357.10 |
| I&E FX Window | 362.19 | 362.58 |
| Cash Market | 357.80 | 357.80 |
| Transfer Market | 364.50 | 364.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns resumed its significantly bullish run in today’s session, with yields declining by c.13bps on the back of renewed demand especially on the longer end of the curve.
In the NGERIA Corps, investors showed renewed interests for the FIDBAN 22s which compressed by c.16bps on the day.
