Culled—-Proshare

Anchoria AM Research

February 11, 2019 

Money Market

The money market rate increased last week as the Overnight rate (OVN) and Open Buy Back (OBB) rose to 11.86% and 11.07% respectively. Consequently, the average money market rate rose by 7.58% to settle at 19.05% due to the decrease in the System liquidity to negative figure of cN128bn from N666bn in the previous week. Major inflow for the week included: OMO repayment of cN315bn while Outflow for the week included: OMO sales of cN643bn; and Weekly Wholesale, Invisible and SME FX auction of $210mn. 

We expect the rate to close higher this week barring any significant inflow as CBN prepared for another round of FX auction on Monday and anticipated OMO auctions during the week.

Source: Anchoria AM Research, FMDQ OTC 

Forex: USD/NGN

The CBN Official rate continued its downward trend to close at N306.70/$, a 0.02% decrease. Also, the rate in the Investors and Exporters’ FX Window fell by 0.27% to close at N361.73/$. We observed an increase in the market turnover in the I&E Window to $1.67 billion during the week from $0.81 billion in the previous week. However, Naira at the parallel market remained unchanged to close at N361.00/$ (using the Everdon BDC Rate). 

We expect rates in the parallel market to remain constant as the apex bank continues to supply FX into the market, coupled with its frequent Wholesale and Retail SMIS programme.

Source: Anchoria AM Research, FMDQ OTC 

Commodities

The Brent Crude Oil and WTI Crude Oil fell by 1.04% and 4.60% to close at $62.10 and $52.72 per barrel respectively due to the following factors:

1. a) Increase in the number of oil rigs in US
2. b) Threat to increase tariff by the US government on Chinese Goods

Fixed Income

Bond: FGN

The Bond Market closed on a bullish note last week with increased demand seen on most maturities during the week. Notable amongst them include 2021s (49bps) and 2037s (49bps).  Average yields fell by 23bp to close the week at 14.68%. This is due to increased inflow from offshore. 

However, we expect the market to be relatively quiet this week as investors remain cautious ahead of the General Elections on Saturday.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC 

Treasury Bills

Due to reduction in system liquidity during the week, the treasury bills market traded on a bearish note. Consequently, the average yield rose by 21bps to close the week at 14.61%. 

The CBN is scheduled to have its Primary Market Auction for Treasury Bills on Wednesday, 13 February 2019. The CBN is expect to rollover the same of bills maturing.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC