Culled—Proshare
March 18, 2019/ Zedcrest Capital
***Nigeria spends $500m annually on palm oil importation *** – CBN
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.31% | As at March 15, 2019. A c.6bps decline from 11.37% recorded in January 2019 |
| MPR | 14.00% | Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting |
| External Reserves | $43.05bn | As at March 15, 2019. A c.0.14% increase from $42.99bn on March 14, 2019 |
| Brent Crude | $67.45pb | As at March 18, 2019. A c.0.10% increase from $66.98pb on March 15, 2019 |
Bonds
We witnessed mild buying interests in the FGN bond market following inflows of c.N50bn from coupon payment on the 2027 bond. Yields were however relatively flat, with a marginal compression of c.1bp on the day.
We expect the market to remain relatively flat in the near term, due to the recent slowdown in demand interests from RM clients. The market is also likely to tilt to a slightly bearish stance ahead of the FGN bond auction to be held next week.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.71 | 14.29 | (0.02) |
| 16.39 27-Jan-22 | 14.58 | 14.28 | 0.00 |
| 12.75 27-Apr-23 | 14.55 | 14.43 | (0.07) |
| 14.20 14-Mar-24 | 14.40 | 14.05 | 0.03 |
| 13.53 23-Mar-25 | 14.54 | 14.37 | (0.07) |
| 12.50 22-Jan-26 | 14.40 | 14.30 | (0.03) |
| 16.29 17-Mar-27 | 14.36 | 14.26 | (0.08) |
| 13.98 23-Feb-28 | 14.35 | 14.23 | 0.01 |
| 12.15 18-Jul-34 | 14.37 | 14.15 | 0.03 |
| 12.40 18-Mar-36 | 14.30 | 14.14 | 0.04 |
| 16.2499 18-Apr-37 | 14.22 | 14.10 | 0.01 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively calm note and was mostly order driven in absence of an OMO auction by the CBN. Yields consequenlty compressed marginally by c.1bp to 13.30% on average.
We expect T-bill Yields to remain relatively stable, barring a renewed OMO sale by the CBN tomorrow. Market players are also expected to cherrypick on some relatively attractive bills, in anticipation of client demand for the PMA scheduled for Wednesday.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Apr-19 | 13.00 | 10.00 | 0.00 |
| 2-May-19 | 11.55 | 10.00 | 0.15 |
| 13-Jun-19 | 11.70 | 11.50 | 0.05 |
| 18-Jul-19 | 12.50 | 12.00 | 0.00 |
| 1-Aug-19 | 12.10 | 11.95 | 0.00 |
| 12-Sep-19 | 13.15 | 13.00 | (0.05) |
| 3-Oct-19 | 13.20 | 13.00 | 0.00 |
| 14-Nov-19 | 13.20 | 13.00 | (0.05) |
| 5-Dec-19 | 13.00 | 12.90 | (0.20) |
| 2-Jan-20 | 13.00 | 12.80 | 0.00 |
| 6-Feb-20 | 12.85 | 12.55 | 0.10 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market remained relatively unchanged as inflows from coupon payments (c.N50bn) cushioned the effects of today’s wholesale FX auction, with system liquidity estimated to have closed the session at c.N75bn positive. The OBB and OVN rates consequently ended the session at 10.58% and 11.58% respectively.
We expect rates to remain relatively stable tomorrow, barring a renewed OMO sale by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 10.58 | 11.17 |
| Overnight (O/N) | 11.58 | 11.67 |
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 by 0.02% to N360.61/$, as market turnover fell by c.78% to $101m. At the parallel market, the cash rate improved slightly to N357.80/$, while the transfer rate remained unchanged at N364.00/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.95 |
| CBN SMIS | 356.92 | 356.92 |
| I&E FX Window | 360.61 | 360.18 |
| Cash Market | 357.80 | 358.00 |
| Transfer Market | 364.00 | 364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained firmly bullish, with yields trending lower by c.11bps on the day. We witnessed the most interests around the mid tenors (25s – 31s) which gained about 0.50pct on the day.
In the NGERIA Corps, we witnessed renewed interests on the UBANL 22s, following the relatively positive results from its 2018 published financial report. We also witnessed firm interests on the FIDBAN 22s which gained c.0.20pct on the day.
