Culled—Proshare
June 25, 2019/Zedcrest Capital
The DMO is set to auction a total of c.N100bn FGN bonds at the auction scheduled for tomorrow. Whilst we expect demand at the auction to be robust given the c.N351bn Jun 2019 bond maturity, we expect stop rates at the auction to still clear above the previous auction levels, given the bearish sentiments within the FGN bond space which lifted yields higher during the month.
Below are highlights from activities in the fixed income and forex market today.
Bonds
The FGN Bond market remained relatively stable, with yields slightly lower by c.4bps on the day, following renewed demand interests on the short end of the curve.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.49 | 13.97 | (0.08) |
| 16.39 27-Jan-22 | 14.23 | 13.84 | (0.12) |
| 12.75 27-Apr-23 | 14.30 | 14.19 | (0.07) |
| 14.20 14-Mar-24 | 14.48 | 14.17 | 0.00 |
| 13.53 23-Mar-25 | 14.43 | 14.23 | (0.16) |
| 12.50 22-Jan-26 | 14.65 | 14.49 | 0.00 |
| 16.29 17-Mar-27 | 14.62 | 14.41 | 0.03 |
| 13.98 23-Feb-28 | 14.59 | 14.50 | 0.01 |
| 12.15 18-Jul-34 | 14.65 | 14.57 | 0.00 |
| 12.40 18-Mar-36 | 14.64 | 14.58 | (0.01) |
| 16.2499 18-Apr-37 | 14.65 | 14.50 | (0.05) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a bullish note with demand interests notable across the curve, largely supported by the surplus money market liquidity and continued abesence of an OMO auction by the CBN.
We expect the mild bullish sentiments to persist over the course of the week, barring an OMO auction, which should likely resume next week due to significant inflows expected from FAAC Payments and Bond Maturities.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 18-Jul-19 | 11.25 | 6.00 | (0.25) |
| 1-Aug-19 | 11.25 | 6.00 | (0.25) |
| 12-Sep-19 | 11.25 | 10.75 | (0.25) |
| 3-Oct-19 | 11.60 | 11.40 | (0.20) |
| 14-Nov-19 | 11.95 | 11.55 | (0.15) |
| 5-Dec-19 | 12.00 | 11.50 | (0.10) |
| 2-Jan-20 | 12.00 | 11.70 | 0.00 |
| 6-Feb-20 | 12.00 | 11.85 | (0.20) |
| 19-Mar-20 | 12.00 | 11.85 | (0.15) |
| 2-Apr-20 | 12.05 | 11.75 | (0.15) |
| 14-May-20 | 11.95 | 11.60 | 0.05 |
| 04-Jun-20 | 11.85 | 11.25 | (0.10) |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market declined by c.3pct as there were no significant funding pressures, whilst system liquidity remained moderately robust at c.N290bn positive. The OBB and OVN rates consequently ended the session at 9.86% and 10.43% respectively.
We expect rates to remain relatively stable, as there are no significant outflows anticipated.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 9.86 | 8.71 |
| Overnight (O/N) | 10.43 | 9.21 |
Source: FMDQ, Zedcrest Research
FX Market
At the interbank, the Naira/USD rate remained stable at N306.90/$ (spot) and N357.53/$ (SMIS), whilst the NAFEX rate at the I&E window rose by 39k to N360.77/$. At the parallel market, the cash and transfer rates closed unchanged at N359.20/$ and N362.50/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.90 | 306.90 |
| CBN SMIS | 357.53 | 357.53 |
| I&E FX Window | 360.77 | 360.38 |
| Cash Market | 359.20 | 359.20 |
| Transfer Market | 362.50 | 362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns weakened slightly in today’s session, with yields marginally higher by c.2bps to 6.78% on average.
Demand Interests in the NGERIA Corps remained firm, with most papers unavailable to trade in the market on the back of the significant demand from the ACCESS and FBNNL Calls. The FBNNL 21s however continued to weaken due to the call announcement and remained the outlier amongst the bank papers.
