March 11, 2019/Zedcrest Capital
***Oil Prices Rise As Saudis Curb Exports***
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.37% | As at February 15, 2019. A c.7bps decline from 11.44% recorded in December 2018 |
| MPR | 14.00% | Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting |
| External Reserves | $42.66bn | As at March 8, 2019. A c.0.12% increase from $42.61bn on March 7, 2019 |
| Brent Crude | $66.52pb | As at March 11, 2019. A c.1.70% increase from $65.41pb on March 8, 2019 |
Bonds
The Bond Market opened the week on a relatively flat note, with slight sell on the 2023s and 2027s pushing yields marginally higher by c.2bps on the day.
We expect the market to remain relatively flat in the near term, due to slowdown in demand interests from offshore clients.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14.50 15-Jul-21 | 14.71 | 14.21 | (0.15) |
| 16.39 27-Jan-22 | 14.61 | 14.32 | 0.10 |
| 12.75 27-Apr-23 | 14.71 | 14.45 | 0.07 |
| 14.20 14-Mar-24 | 14.46 | 14.17 | 0.23 |
| 13.53 23-Mar-25 | 14.55 | 14.31 | (0.06) |
| 12.50 22-Jan-26 | 14.42 | 14.31 | (0.05) |
| 16.29 17-Mar-27 | 14.41 | 14.21 | 0.06 |
| 13.98 23-Feb-28 | 14.28 | 14.21 | 0.01 |
| 12.15 18-Jul-34 | 14.33 | 14.11 | 0.04 |
| 12.40 18-Mar-36 | 14.32 | 14.19 | (0.05) |
| 16.2499 18-Apr-37 | 14.30 | 14.16 | 0.01 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a slightly bullish note, with demand mostly on the short end of the curve, in absence of an OMO Auction by the CBN which left system liquidity relatively buoyant in positve territory.
We expect yields to remian relatively stable, with market players expected to sustain interests for relatively attractive bills ahead of the PMA auction scheduled for Wednesday. A renewed OMO auction by the CBN tomorrow might however cause yields to trend slightly higher.
| Benchmark Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 4-Apr-19 | 11.00 | 7.00 | (0.50) |
| 2-May-19 | 11.50 | 10.00 | 0.50 |
| 13-Jun-19 | 11.90 | 11.90 | 0.00 |
| 18-Jul-19 | 12.50 | 11.90 | (0.25) |
| 1-Aug-19 | 13.00 | 12.10 | 0.25 |
| 12-Sep-19 | 13.40 | 13.25 | (0.05) |
| 3-Oct-19 | 13.50 | 13.40 | (0.10) |
| 14-Nov-19 | 13.65 | 13.40 | 0.10 |
| 5-Dec-19 | 13.50 | 13.15 | 0.00 |
| 2-Jan-20 | 13.35 | 13.10 | (0.15) |
| 6-Feb-20 | 13.30 | 12.95 | 0.05 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market remained relatively stable with the OBB and OVN rates closing the session slightly higher at 10.83% and 11.58% respectively. This was as system liquidity remained moderately robust at c.N70bn despite the wholesale FX auction today.
We expect rates to remain relatively stable, barring a significant OMO sale by the CBN tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 10.83 | 9.17 |
| Overnight (O/N) | 11.58 | 10.08 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate depreciated marginally by 0.02% to N306.95/$ at the spot market, while the SMIS rate remained unchanged at N356.92/$. The NAFEX rate in the I&E window appreciated further by 0.05% to N360.23/$, while the cash rate and transfer rates at the parallel market remained unchanged at N358.00/$ and N365.00/$ respectively.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.95 | 306.90 |
| CBN SMIS | 356.92 | 356.92 |
| I&E FX Window | 360.23 | 360.42 |
| Cash Market | 358.00 | 358.00 |
| Transfer Market | 365.00 | 365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns turned bullish in today’s session, as oil prices moved higher following a continued curb in output by Saudi Arabia. Yields consequently declined by c.14bps, with the most interests witnessed on the 2032s which gained c.1.3pct on the day.
Activities were relatively muted in the NGERIA Corps, with slight demand witnessed on the Zenith 22s, and some sell interests on the ACCESS, FBNNL and ECOTRA 21s.
