Market News

Rising Oil Prices Sustain Demand for Nigerian Eurobonds - ZEDCREST CAPITAL

JANUARY 10, 2019

***World Bank Projects 2.2% GDP Growth for Nigeria in 2019***

KEY INDICATORS

Indicator

Value

Commentary

Inflation

11.28%

As at December 14, 2018. A c.2bps increase from 11.26% recorded in October 2018

MPR

14.00%

Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting

External Reserves

$43.05bn

As at January 7, 2018. A c.0.02% increase from $43.04bn on January 3, 2018

Brent Crude

$60.09pb

As at January 9, 2019. A c.2.74% increase from $58.49pb on January 8, 2018

 

Bonds

The Bond market remained scantily traded, but with some profit taking on the 37s lifting yields marginally higher by c.1bp, despite the continued interests around the mid tenors.

 

We expect the market to remain relatively flat in the near term, with yields expected to gain support at these levels.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

15.03

14.47

0.05

14.50 15-Jul-21

15.51

15.29

0.02

16.39 27-Jan-22

15.09

14.83

0.00

14.20 14-Mar-24

15.10

14.87

0.01

12.50 22-Jan-26

15.57

15.48

(0.03)

16.29 17-Mar-27

15.50

15.40

0.03

13.98 23-Feb-28

15.53

15.44

(0.01)

12.15 18-Jul-34

15.50

15.30

0.00

12.40 18-Mar-36

15.53

15.30

(0.02)

16.2499 18-Apr-37

15.40

15.35

0.04

Source: Zedcrest Dealing Desk

 

 

 

 

 

 

 

 

 

Treasury Bills

The T-bills market traded on a slightly bullish note, in the absence of an OMO auction by the CBN. We witnessed the most interests around the mid tenors (Jun/July) as some market players looked to stockpile (in anticipation of client demand on the mid tenured bills) at the relatively more attractive rates in the secondary market.

We expect yields to trend slightly higher tomorrow, especially on the longer end of the curve, as the CBN is expected to conduct an OMO auction to mop up c.N375bn in maturing OMO bills.

Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Feb-19

15.50

14.40

(0.25)

14-Mar-19

15.00

14.15

0.00

4-Apr-19

13.50

12.60

0.40

2-May-19

13.75

13.15

(0.05)

13-Jun-19

13.65

13.35

0.00

18-Jul-19

13.65

13.35

(0.05)

1-Aug-19

13.90

13.60

(0.35)

12-Sep-19

14.95

14.60

(0.10)

3-Oct-19

14.95

14.50

(0.10)

14-Nov-19

14.95

14.65

(0.10)

5-Dec-19

15.00

14.85

0.00

Source: Zedcrest Dealing Desk

 

 

 

Money Market

Rates in the money market remained elevated, with the OBB and OVN rates closing the day at 26.67% and 27.67%, as there were no significant inflows to bolster system liquidity which opened the day in negative territory of c.N113bn.

We expect rates to moderate sharply tomorrow, on the back of inflows from OMO maturities. This is however barring a significant OMO mop up by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

26.67

25.00

Overnight (O/N)

27.67

27.25

Source: FMDQ, Zedcrest Research

 

 

 

 

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.90/$ (spot) and N358.13/$ (SMIS). The NAFEX rate in the I&E window appreciated from a three-day losing streak by c.0.27% to N364.90/$ from N365.87/$ previously. At the parallel market, the cash and transfer rates depreciated by c.0.19% and c.0.27% to N360.50/$ and N365.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.90

CBN SMIS

358.31

358.31

I&E FX Window

364.90

365.87

Cash Market

360.50

359.80

Transfer Market

365.00

364.00


 

 

Eurobonds

The NGERIA Sovereigns resumed its recent rally as oil prices maintained their longest gaining streak in 2-yrs. The yields curve consequently compressed further by c.10bps on average, culminating in a c.65bps rally in the last four sessions.

 

In the NGERIA Corps, investors were significantly bullish on the Zenith 19s and 22s as the bank outlined its retail financial strategy for the year. We also witnessed renewed interests for the DIAMBK 19s, Access 21s snr and UBANL 22s.

 

 

 

 

 

 

 

 

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