Culled—Proshare
February 14, 2019/Zedcrest Capial
***NESG forecast GDP growth by 3.2% in 2019***
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 | $42.89bn | As at February 12, 2019. A c.0.01% decrease from $42.89bn on February 12, 2019 |
| Brent Crude | $63.71pb | As at February 14, 2019. A c.0.01% increase from $63.70pb on February 13, 2019 |
Bonds
The Bond Market remained fairly stable in today’s session, with yields compressing further by c.2bps, owing to slightly demand by market players who remained well bid on the mid to long end of the curve.
We do not expect any significant changes to the recent sluggish trend ahead of the elections, but sentiments remain tilted towards a bullish stance on the back of an overall bullish EM trend and expectations for renewed demand post elections. Expectations for renewed supply of bonds at the Auction next week should however keep buying interests in check in the near term.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.02 | 14.66 | (0.07) |
| 14.50 15-Jul-21 | 14.95 | 14.32 | 0.06 |
| 16.39 27-Jan-22 | 14.61 | 14.35 | (0.01) |
| 14.20 14-Mar-24 | 14.70 | 14.60 | (0.01) |
| 12.50 22-Jan-26 | 14.76 | 14.70 | (0.01) |
| 16.29 17-Mar-27 | 14.85 | 14.76 | (0.03) |
| 13.98 23-Feb-28 | 14.66 | 14.59 | (0.05) |
| 12.15 18-Jul-34 | 14.64 | 14.53 | (0.03) |
| 12.40 18-Mar-36 | 14.53 | 14.49 | 0.00 |
| 16.2499 18-Apr-37 | 15.02 | 14.66 | (0.07) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded with mixed sentiments as an OMO auction by the CBN forced slight sell on some short tenor bills. The CBN sold a total of c.N507bn OMO bills of the N650bn it offered, in a bid to check the excess inflows from the maturing OMO bills. Demand was mostly skewed to the 364-day offering (c.N440bn), with rates maintained at previous levels.
We expect yields to remain slightly elevated with the system liquidity expected to compress slightly from the Retail FX funding by banks tomorrow.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Mar-19 | 12.00 | 11.50 | 0.00 |
| 4-Apr-19 | 15.00 | 13.50 | 2.40 |
| 2-May-19 | 13.50 | 11.00 | 2.25 |
| 13-Jun-19 | 13.00 | 11.00 | 1.00 |
| 18-Jul-19 | 13.75 | 12.50 | 0.75 |
| 1-Aug-19 | 13.00 | 12.75 | 0.05 |
| 12-Sep-19 | 14.50 | 14.30 | 0.00 |
| 3-Oct-19 | 14.80 | 14.70 | 0.00 |
| 14-Nov-19 | 14.90 | 14.85 | (0.05) |
| 5-Dec-19 | 14.95 | 14.80 | 0.00 |
| 2-Jan-20 | 15.00 | 14.85 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market slid lower by c.6pct, as OMO repayments of c.N800bn by the CBN bolstered system liquidity significantly to c.N120bn positive. The OBB and OVN rates consequently ended the session at 15.00% and 16.00% respectively.
We expect rates to trend slightly higher tomorrow, due to expected funding for the bi-weekly retail FX sale by the CBN
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 15.00 | 20.00 |
| Overnight (O/N) | 16.00 | 23.17 |
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 however appreciated by c.0.04% to N361.85/$, while the cash and transfer rates at the parallel market remained unchanged at N360.00/$ and N365.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.75 | 306.75 |
| CBN SMIS | 357.10 | 357.10 |
| I&E FX Window | 361.85 | 362.03 |
| Cash Market | 359.00 | 359.00 |
| Transfer Market | 365.00 | 365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns weakened slightly in today’s session, with yields ticking higher by c.4bps on the back of some profit taking mostly around the mid-tenors.
In the NGERIA Corps, there was slight sell on the DIAMBK 19s and FBNNL 21s.
