Culled—Proshare
March 28, 2019/ Zedcrest Capital
***FG launches Micro Pension Plan for informal sector***
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 | 13.50% | Cut by 50bps to 13.50% at the Mar. 26, 2019 MPC Meeting |
| External Reserves | $44.14bn | As at March 26, 2019. A c.0.23% increase from $44.04bn on March 25, 2019 |
| Brent Crude | $66.77pb | As at March 29, 2019. A c.0.64% decrease from $67.20pb on March 28, 2019 |
Bonds
The FGN Bond market traded on a relatively flat note despite the significant cut in stop rates at yesterday’s auction. We witnessed slight demand on the short end of the curve (23s & 24s) countered by some profit taking on the 2028s which trended higher by c.20bps on the day, (having compressed significantly in the previous session). Yields were consequently unchanged on the day, closing at c.14.30% on average.
We expect yields to trend slightly upwards due to the recent profit taking sentiments in the market. We should however witness some renewed demand if the CBN maintains a hold on OMO sales.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.47 | 13.94 | 0.00 |
| 16.39 27-Jan-22 | 14.41 | 13.98 | 0.10 |
| 12.75 27-Apr-23 | 14.12 | 13.90 | (0.08) |
| 14.20 14-Mar-24 | 14.32 | 13.91 | (0.14) |
| 13.53 23-Mar-25 | 14.29 | 14.07 | 0.04 |
| 12.50 22-Jan-26 | 14.34 | 14.13 | (0.09) |
| 16.29 17-Mar-27 | 14.35 | 14.16 | 0.00 |
| 13.98 23-Feb-28 | 14.30 | 14.12 | 0.21 |
| 12.15 18-Jul-34 | 14.24 | 14.08 | (0.09) |
| 12.40 18-Mar-36 | 14.30 | 14.05 | 0.02 |
| 16.2499 18-Apr-37 | 14.23 | 14.07 | 0.00 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively flat note, even as the CBN held of on OMO despite the c.N60bn in OMO T-bill maturities today.
Market players anticipate a renewed OMO auction by the CBN tomorrow, due to expected inflows from FAAC payments. We expect the market to trade slightly bearish if this occurs.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Apr-19 | 11.50 | 5.00 | 0.00 |
| 2-May-19 | 11.00 | 9.00 | 0.00 |
| 13-Jun-19 | 12.00 | 11.00 | 0.00 |
| 18-Jul-19 | 12.20 | 11.30 | 0.00 |
| 1-Aug-19 | 12.10 | 11.85 | (0.10) |
| 12-Sep-19 | 13.25 | 13.00 | 0.05 |
| 3-Oct-19 | 13.10 | 13.00 | 0.05 |
| 14-Nov-19 | 13.20 | 13.10 | (0.20) |
| 5-Dec-19 | 13.15 | 12.90 | 0.05 |
| 2-Jan-20 | 13.10 | 13.05 | 0.00 |
| 6-Feb-20 | 13.05 | 12.95 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market declined by c.5pct as inflows from retail FX refunds bolstered system liquidity which opened the day at c.N80bn positive. The OBB and OVN rates consequently ended the session at 10.07% and 10.71% respectively.
We expect rates to trend slightly higher tomorrow, due to expected outflows for Bond auction debits, a possible OMO sale and Retail FX provisioning by banks.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 10.07 | 15.14 |
| Overnight (O/N) | 10.71 | 15.50 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (spot) and N355.78/$ (SMIS). The NAFEX closing rate in the I&E window depreciated further by 0.03% to N360.80/$, whilst market turnover improved by 74% to $203m. At the parallel market, the cash rates depreciated further by 0.03% to N358.30/$ whilst the transfer rate remained unchanged at N364.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.95 |
| CBN SMIS | 355.78 | 355.78 |
| I&E FX Window | 360.80 | 360.68 |
| Cash Market | 358.30 | 358.20 |
| Transfer Market | 364.00 | 364.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained slightly bearish, with yields higher by c.3bps on the day. Investors however showed renewed interest for duration plays on the longer end of the curve (47s and 49s).
In the NGERIA Corps, we witnessed interests mostly on the DIAMBK 19s and FIDBAN 22s
