30/4/2019/Zedcrest Capital
Upon resumption from the May Day break, the CBN will offer c.N110bn T-bills to rollover maturing NTBs on behalf of the Federal Govt. We expect rates to be relatively unchanged from their previous auction levels.
Below are highlights from activities within the Fixed Income and FX market today.
Bond Market
The Bond market remained largely order driven, with yields weakening slightly following slight sell on the short end of the curve. We also witnessed some profit taking bias on some mid and long tenured maturities, which lifted yields marginally higher by c.3bps on the day.
We expect trading activities to resume on a relatively quiet note after the May Day break, as market players carefully monitor movement in short term rates by the CBN.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.74 | 14.47 | 0.14 |
| 16.39 27-Jan-22 | 14.67 | 14.40 | 0.11 |
| 12.75 27-Apr-23 | 14.60 | 14.46 | 0.00 |
| 14.20 14-Mar-24 | 14.48 | 13.97 | 0.07 |
| 13.53 23-Mar-25 | 14.55 | 14.21 | 0.00 |
| 12.50 22-Jan-26 | 14.60 | 14.46 | (0.02) |
| 16.29 17-Mar-27 | 14.60 | 14.48 | 0.01 |
| 13.98 23-Feb-28 | 14.58 | 14.40 | 0.05 |
| 12.15 18-Jul-34 | 14.64 | 14.42 | (0.01) |
| 12.40 18-Mar-36 | 14.65 | 14.49 | 0.07 |
| 16.2499 18-Apr-37 | 14.62 | 14.51 | 0.03 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a relatively quiet note, except for slight buying interests witnessed on the short end of the curve. Yields however weakened slightly on the mid to long end of the curve, as market players anticipate a renewed OMO offering by the CBN, in the view of the relatively boisterous sytem liquidity levels.
| NTB Auction Expectations | |||
| Tenor | Offer (N’bn) | Expected Rate (%) | Previous Rate (%) |
| 91 days | 28.02 | 10.10 – 10.40 | 10.15 |
| 182 days | 43.52 | 12.35 – 12.75 | 12.50 |
| 364 days | 38.17 | 12.50 – 12.85 | 12.74 |
| Benchmark Treasury BillsDescriptionBid (%)Offer (%)Day Change (%)13-Jun-1911.257.000.0018-Jul-1911.506.000.001-Aug-1911.009.000.0012-Sep-1912.9012.750.003-Oct-1912.9512.800.0014-Nov-1912.7012.50(0.05)5-Dec-1912.9512.750.052-Jan-2012.9512.700.056-Feb-2012.9512.750.1519-Mar-2012.8012.600.102-Apr-2012.8012.500.10Source: Zedcrest Dealing Desk |
Money Market
The OBB and OVN rates fell sharply by c.10pct as system liquidity rose to c.N150bn positive, whilst market players were also able to access the CBN’s SLF window. The OBB and OVN rates consequently ended the session at 8.96% and 9.82% respectively.
We expect rates to remain relatively stable due to the relatively buoyant system liquidity levels, this is however barring a significant OMO mop up later this week by the CBN.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 8.96 | 17.86 |
| Overnight (O/N) | 9.82 | 18.57 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate was unchanged at N306.95/$ (spot) and N356.46/$ (SMIS). The NAFEX closing rate in the I&E window appreciated marginally by 0.04% to N360.63/$, as market turnover improved slightly by 6% to $176m. At the parallel market, the cash rate appreciated by 0.03% to N358.70/$, whilst the transfer rate depreciated by 0.14% to N363.50/$.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.95 |
| CBN SMIS | 356.46 | 356.46 |
| I&E FX Window | 360.63 | 360.79 |
| Cash Market | 358.70 | 358.80 |
| Transfer Market | 363.50 | 363.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns maintained a relatively flat trend, with only few interests witnessed in the belly of the curve.
The NGERIA Corps were however significantly bullish, with demand interests most notable on the longer dated tickers – UBANL 22s, FIDBAN 22s, and ETINL 24s.
