Culled—Proshare
February 14, 2019/ Zedcrest Capital
***NNPC, Total, Shell, NAOC take Final Investment Decision on 4.3trn ANOH gas fields***
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 $42.90bn on February 11, 2019 |
| Brent Crude | $63.70pb | As at February 13, 2019. A c.01.84% increase from $62.55pb on February 12, 2019 |
Bonds
Prices in the FGN Bond market strengthened slightly in today’s session on the back of some order flows largely due to the c.N47bn coupon payments on the 13-Feb-2020 bond which leaves the benchmark today. Demand was strongest on the 2037s, whilst investors also hunted for bargains on the 27s and 28s.
We expect yields to remain relatively flat towards weekend, as market players maintain a near term cautious outlook in view of the elections.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.09 | 14.66 | (0.03) |
| 14.50 15-Jul-21 | 14.89 | 14.35 | (0.09) |
| 16.39 27-Jan-22 | 14.62 | 14.39 | 0.00 |
| 14.20 14-Mar-24 | 14.71 | 14.60 | (0.02) |
| 12.50 22-Jan-26 | 14.77 | 14.73 | (0.08) |
| 16.29 17-Mar-27 | 14.88 | 14.75 | (0.03) |
| 13.98 23-Feb-28 | 14.71 | 14.57 | (0.06) |
| 12.15 18-Jul-34 | 14.67 | 14.55 | (0.05) |
| 12.40 18-Mar-36 | 14.53 | 14.48 | (0.06) |
| 16.2499 18-Apr-37 | 15.09 | 14.66 | (0.03) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively flat note, but with slight sell on the shorter end of the curve due to the relative squeeze in system liquidity. Despite the tight system liquidity levels, the NTB auction by the CBN was significantly oversubscribed by market players, with total bid to cover of 2.86X, largely driven by the significant oversubscription on the 1-year bill (c.N405bn). The CBN eventually sold the total offered amount of c.N153bn with stop rates clearing marginally lower by c.5bps from their previous auction levels.
We expect yields to trend lower tomorrow due to the significant inflows expected form the c.N630bn OMO maturities. The CBN is however expected to float a significant OMO auction to counter the maturities.
| NTB Auction Result | ||||
| Tenor | Rate (%) | Offer (₦’bn) | Sub (₦‘bn) | Sale (₦‘bn) |
| 91-days | 10.97 | 3.38 | 11.57 | 3.38 |
| 182-days | 13.40 | 10.00 | 22.11 | 10.00 |
| 364-days | 14.95 | 140.00 | 404.89 | 140.00 |
Source: CBN
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Mar-19 | 12.00 | 11.50 | (0.30) |
| 4-Apr-19 | 12.60 | 11.00 | 0.10 |
| 2-May-19 | 11.25 | 11.00 | (0.25) |
| 13-Jun-19 | 12.00 | 10.50 | 0.00 |
| 18-Jul-19 | 13.00 | 12.50 | 0.00 |
| 1-Aug-19 | 12.95 | 12.75 | 0.00 |
| 12-Sep-19 | 14.50 | 14.30 | 0.00 |
| 3-Oct-19 | 14.80 | 14.50 | 0.00 |
| 14-Nov-19 | 14.95 | 14.85 | 0.00 |
| 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 moderated marginally by c.3pct as inflows from the c.N47bn bond coupon payments somewhat improved system liquidity levels currently estimated at c.N70bn negative.
We expect rates to slide lower tomorrow, as inflows from the c.N630bn OMO maturities are expected to bolster system liquidity levels. This should however be moderated by a significant OMO sale by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 20.00 | 24.17 |
| Overnight (O/N) | 23.17 | 27.50 |
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 depreciated by c.0.04% to N362.01/$, while the cash and transfer rates at the parallel market remained unchanged at N360/$ 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 | 362.03 | 361.87 |
| Cash Market | 360.00 | 360.00 |
| Transfer Market | 365.50 | 365.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
Following sustained gains in Oil prices, yields on the NGERIA Sovereigns pushed lower by c.13bps, with investors ramping up purchases across the curve. The most gains were however at the belly curve, following increased demand for the 25s and 27s.
In the NGERIA Corps, yields retraced slightly on the UBANL 22s, with slight sell however on the ACCESS 21s and FIDBAN 22s.
