Culled—Proshare

March 11, 2019/Anchoria Research

Money Market

The money market rate decreased significantly last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 10.08% and 9.17% respectively. Consequently, the average money market rate fell by 7.25% to settle at 9.63% due to the increase in the System liquidity to cN157bn from cN95bn in the previous week. Major inflow for the week included: OMO Maturity of cN228.9bn, FAAC payment of cN350bn, Paris Club refund and I&E FX Purchases by the CBN while Major Outflow include Weekly Wholesale, Invisible and SME FX auction of $210mn, and OMO Sale of cN1.08trn. 

We expect the rate to close higher this week barring any significant inflow due to the following reason: CBN weekly FX auctions on Monday, anticipated OMO auctions, T-bills Primary Market Auction and Biweekly retail FX auction during the week.

Forex: USD/NGN

The CBN Official rate grew by 0.02% to close at N306.90/$ while the rate in the Investors and Exporters’ FX Window fell by 0.17% to close at N360.42/$ as we continue to witness buoyant market turnover with inflows from Foreign Portfolio Investors. However, Naira at the parallel market remained unchanged to close at N360.00/$ (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

Despite the delay in US and China trade deal and lesser than expected US Job report, the Brent Crude Oil and WTI Crude Oil rose by 1.03% and 0.48% to close at $65.74 and $56.07 per barrel respectively due to continued cut in output by OPEC members and fall in US drilling activity. 

Fixed Income

Bond: FGN

Ahead of the gubernatorial election, the bond market traded on a bearish note with sell offs seen on most maturities especially 2023 (+48bps) and 2028 (+43bps) bonds. Average yields rose by 34bps to close the week at 14.29%. Other factors that shaped market activities during the week included:

• the rumour of the resignation or suspension of the CBN Governor before expiration of his term in June 2019
• Changes in the Q1 2019 Bond Calendar reflecting a N30 bn decline in the amount of 10-year bond to be offered in the next bond auction.
• Relative reduction in FPIs activities

We expect the market to pick up this week following the successful conclusion of the gubernatorial election during the weekend.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC 

Treasury Bills

Despite the increase in system liquidity during the week, the treasury bills market traded on a bearish note as investors focused more on high yielding OMO auction. Consequently, the average yield rose by 49bps to close the week at 13.47%.

The CBN is scheduled to conduct its T-Bills Primary Market Auction on Wednesday, 13 March 2019.

Secondary Market

Source: Anchoria AM Research, FMDQ OTC

Anchoria Research: +234 908 720 6076;  research@anchoriaam.com