Culled—Proshare
6/9/2019
By Zedcrest Capital
Improved demand interests flowed in the Treasury Bills secondary market in today’s session as, contrary to market expectations, there was no OMO auction floated by the CBN.
Below are highlights of trading acivities in the fixed income and forex market today.
Bonds
The FGN Bond market closed the week with sustained demand pressures across the curve. Yields compressed further by c.7bps on the average across the FGN Bond Benchmark curve, most notably at the short- to mid-end maturities.
We expect to see sustained demand at the mid-end of the curve, as clients’ preference for duration seem to peak at the 10-year benchmark.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change(%) |
| 14.50 15-Jul-21 | 14.15 | 13.68 | (0.32) |
| 16.39 27-Jan-22 | 14.47 | 14.07 | (0.05) |
| 12.75 27-Apr-23 | 14.40 | 14.24 | (0.16) |
| 14.20 14-Mar-24 | 14.35 | 13.98 | 0.00 |
| 13.53 23-Mar-25 | 14.33 | 13.84 | 0.00 |
| 12.50 22-Jan-26 | 14.36 | 14.15 | (0.05) |
| 16.29 17-Mar-27 | 14.26 | 14.13 | (0.02) |
| 13.98 23-Feb-28 | 14.26 | 14.14 | (0.03) |
| 12.15 18-Jul-34 | 14.61 | 14.40 | (0.04) |
| 12.40 18-Mar-36 | 14.61 | 14.40 | (0.06) |
| 16.2499 18-Apr-37 | 14.65 | 14.40 | (0.02) |
| 14.80 26-Apr-49 | 14.61 | 14.50 | (0.06) |
Source: Zedcrest Dealing Desk
Treasury Bills
Yields in the NTBills Benchmark Curve compressed by c.9bps, especially at the long-end, supported by buoyant system liquidity.
We expect the market to trade cautiously next week, as participants consider the possibility of further rate hikes at PMA and OMO auctions expected later in the week.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 12-Sep-19 | 12.85 | 11.90 | (0.15) |
| 3-Oct-19 | 12.80 | 12.00 | 0.00 |
| 14-Nov-19 | 13.00 | 12.00 | 0.00 |
| 5-Dec-19 | 13.00 | 12.20 | 0.00 |
| 2-Jan-20 | 13.30 | 12.50 | 0.00 |
| 6-Feb-20 | 13.00 | 12.50 | (0.20) |
| 19-Mar-20 | 13.00 | 12.50 | 0.00 |
| 2-Apr-20 | 13.30 | 12.85 | 0.15 |
| 14-May-20 | 13.50 | 13.00 | 0.00 |
| 04-Jun-20 | 13.50 | 13.20 | (0.50) |
| 02-Jul-20 | 13.65 | 13.15 | (0.35) |
| 13-Aug-20 | 13.55 | 13.30 | (0.05) |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market dropped by an average of c.110 bps supported by buoyant system liquidity. The OBB and OVN rates ended the week at 3.21% and 3.86% respectively, as system liquidity remained well in positive territory at c.N692bn.
Despite funding pressures from Wholesale and Retail FX funding next week, we expect rates to remain stable at low levels in light of high system liquidity levels and expected OMO maturities of at least c.N348bn.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 3.21 | 4.21 |
| Overnight (O/N) | 3.86 | 5.14 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD spot and SMIS rates remained stable at N306.90/$ and N358.04/$. The Naira appreciated at the I&E window by 11k to close at N362.08/$. At the parallel market, the cash and transfer rates remained stable at N357.70/$ and N362.50/$ respectively.
| FX Market | ||
| Current (N/$) | Previous (N/$) | |
| CBN Spot | 306.90 | 306.90 |
| CBN SMIS | 358.04 | 358.04 |
| I&E FX Window | 362.08 | 362.19 |
| Cash Market | 357.70 | 357.70 |
| Transfer Market | 362.50 | 362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns continued their losing streak, weakening further by c.3bps across the curve. Volatility in global oil prices from escalating trade sentiments saw the markets close the week softer.
The NGERIA corps traded on a muted note, with slightly improved bids witnessed across the tracked tickers. We witnessed some buy interest on the FIDABN 22s and ETINL 24s.
