Culled—Proshare
March 12, 2019/Zedcrest Capital
***Nigeria’s active mobile subscribers hit 172m in Q4 2018***– NBS
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.37% | As at February 15, 2019. A c.7bps decline from 11.44% recorded in December 2018 |
| MPR | 14.00% | Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting |
| External Reserves | $42.66bn | As at March 8, 2019. A c.0.12% increase from $42.61bn on March 7, 2019 |
| Brent Crude | $67.14pb | As at March 12, 2019. A c.0.93% increase from $66.52pb on March 11, 2019 |
Bonds
The FGN Bond Market remained scantily traded, with yields trending further higher by c.4bps as demand interests remained relatively weak across the curve.
The recent pullback in bond yields have been mostly due to the slowdown in FPI interests, even as local fixed income investors have maintained preference for the Fed Govt T-bills. Barring renewed interests from FPIs, we expect the bond market to remain relatively weak in the near term.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.71 | 14.34 | 0.00 |
| 16.39 27-Jan-22 | 14.65 | 14.34 | 0.04 |
| 12.75 27-Apr-23 | 14.66 | 14.44 | (0.05) |
| 14.20 14-Mar-24 | 14.46 | 13.97 | 0.00 |
| 13.53 23-Mar-25 | 14.59 | 14.31 | 0.04 |
| 12.50 22-Jan-26 | 14.44 | 14.32 | 0.02 |
| 16.29 17-Mar-27 | 14.53 | 14.36 | 0.12 |
| 13.98 23-Feb-28 | 14.33 | 14.25 | 0.05 |
| 12.15 18-Jul-34 | 14.39 | 14.12 | 0.06 |
| 12.40 18-Mar-36 | 14.43 | 14.25 | 0.11 |
| 16.2499 18-Apr-37 | 14.34 | 14.23 | 0.04 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively calm note, with better offers on the short and mid end of the curve as against the relatively stronger bids seen on the longer end of the curve.
The CBN on behalf of the FGN would offer c.N90bn T-bills at a Primary Market Auction scheduled to hold tomorrow. Given the recent stop in the one year OMO offering by the CBN, we expect demand to be heavily skewed to the 364-day bill with stop rates on the tenor expected to clear at c.150bps below the level at the previous NTB auction. Stop rates on the 91 and 182 day bills are however expected to be relatively unchanged from previous levels.
| NTB Auction Expectation | |||
| Tenor | Offer (N’bn) | Expected Rate (%) | Previous Rate (%) |
| 91 days | 5.00 | 10.75 – 11.05 | 10.90 |
| 182 days | 14.00 | 12.90 – 13.20 | 13.01 |
| 364 days | 70.50 | 12.65 – 12.95 | 14.37 |
Source: Zedcrest Research
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Apr-19 | 12.50 | 10.00 | 1.50 |
| 2-May-19 | 12.00 | 10.00 | 1.00 |
| 13-Jun-19 | 11.90 | 11.40 | 0.40 |
| 18-Jul-19 | 13.00 | 11.90 | 1.10 |
| 1-Aug-19 | 13.00 | 12.10 | 0.50 |
| 12-Sep-19 | 13.40 | 13.25 | 0.40 |
| 3-Oct-19 | 13.55 | 13.35 | 0.15 |
| 14-Nov-19 | 13.55 | 13.35 | 0.05 |
| 5-Dec-19 | 13.50 | 13.25 | (0.15) |
| 2-Jan-20 | 13.40 | 13.00 | (0.10) |
| 6-Feb-20 | 13.30 | 12.90 | (0.05) |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market remained relatively stable with the OBB and OVN rates closing the session slightly lower at 9.67% and 10.33% respectively. This was as system liquidity improved to c.N180bn positive, in absence of an OMO auction by the CBN.
We expect rates to remain relatively stable tomorrow, as there are no significant outflows anticipated.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 9.67 | 10.83 |
| Overnight (O/N) | 10.33 | 11.58 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (Spot) and N356.92/$ (SMIS). The NAFEX closing rate in the I&E window however weakened slightly by 0.06% to N360.44/$, while the cash rate and transfer rates at the parallel market remained unchanged at N358.00/$ and N365.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.95 |
| CBN SMIS | 356.92 | 356.92 |
| I&E FX Window | 360.44 | 360.23 |
| Cash Market | 358.00 | 358.00 |
| Transfer Market | 365.00 | 365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained bullish as oil prices sustained gains, now above $67pb. Yields were consequently lower by c.9bps on average, with the most demand still witnessed on the 2032s.
Activities remained relatively muted in the NGERIA Corps, with slight demand witnessed on the DIAMBK 19s, UBANL 22s and SEPLLN 23s.
