PMA Rates Clear Higher Amid Tighter System Liquidity



***Senate Approves Issuance of $2.786bn Eurobond for 2018 Budget Funding***


Indicator Value Commentary
Inflation 11.23% As at September14, 2018,9bps up from 11.14% recorded in July 2018.
MPR 14.00% Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting
External Reserves $42.91bn As atOctober16, 2018. A c.0.21% decrease from $43.00bnon October15, 2018
Brent Crude $80.19pb As at October 17, 2018. A c.1.72% increasefrom$81.59pbon October 16, 2018


The bond market remained scantily traded in today’s session with slight sell pressures witnessed on the shorter end of the curve (24s mostly). Yields were consequently higher by c.6bps as buying interests remained largely absent for the third consecutive session.

We expect this trend to persist, as market players are expected to stay cautious in anticipation of the forthcoming bond auction, where demand is expected to be weaker compared to the previous auction. 

Benchmark FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
15.54 13-Feb-20 14.07 13.57 0.04
14.50 15-Jul-21 15.04 14.54 0.09
16.39 27-Jan-22 14.78 14.01 0.25
14.20 14-Mar-24 15.10 14.89 0.08
12.50 22-Jan-26 14.99 14.87 0.06
16.29 17-Mar-27 15.13 15.07 (0.02)
13.98 23-Feb-28 15.28 15.21 0.01
12.15 18-Jul-34 15.27 15.18 0.00
12.40 18-Mar-36 15.28 15.14 0.01
16.2499 18-Apr-37 15.15 14.96 0.03

Source: Zedcrest Dealing Desk  

Treasury Bills

Yields in the T-bills market inched marginally higher by c.5bps, amid a sustained tightening of system lqiudity, which opened the day in negative territory. Market players also stayed on the sidelines for most of the trading session, in anticpation of results of the PMA.

Of the total amount of c.N147.64bn on offer, the DMO recorded total subscriptions of c.N204bn and was cosequently able to raise the total amount offered. In line with our expectations, rates cleared above their previous levels, with the most uptick recorded on the 182-day (+59bps) at 12.69%, while the 91 and 364-day cleared at 10.96% (+6bps) and 13.449% (+12bps) respectively.

We expect the market to remain slightly bearish tomorrow, as the CBN is expected to float an OMO auction in lieu of the c.N347bn OMO maturities.

NTB PMA Result
Tenor Rate (%) Offer (N’bn) Sub (N’bn) Sale (N’bn)
91 days 10.96 5.85 5.92 5.85
182 days 12.69 29.25 30.49 29.25
364 days 13.45 112.54 167.59 112.54
Benchmark FGN Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
1-Nov-18 13.35 12.90 (0.15)
6-Dec-18 12.90 12.65 0.00
3-Jan-19 12.55 12.35 0.05
14-Feb-19 12.80 12.50 (0.05)
14-Mar-19 12.70 12.45 (0.15)
4-Apr-19 12.55 12.25 0.05
18-Jul-19 13.25 12.90 0.25
1-Aug-19 13.30 13.00 0.05
12-Sep-19 13.50 13.35 0.25

Source: Zedcrest Dealing Desk  

Money Market

In line with our expectations, the OBB and OVN rates, remained slightly above the 20% mark, closing today at 22.67% and 24.79%, as system liquidity dipped into negative territory opening the day.

We expect rates to dip slightly tomorrow, due to anticipated inflows from OMO maturities. This is however barring a significant OMO sale by the CBN.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 22.67 24.14
Overnight (O/N) 24.79 26.50

Source: FMDQ, Zedcrest Research 

FX Market

At the Interbank, the Naira/USD rate remained stable at N306.50/$ (spot) and N362.52/$ (SMIS). At the I&E FX window a total of $317.11mn was traded in 272 deals, with rates ranging between N358.00/$ – N365.00/$. The NAFEX closing rate appreciated by c.0.10% toN363.96/$ from N364.33/$ previously.

At the parallel market, the cash rate appreciated by 10k to N360.10/$ while the transfer rates remained unchanged at N363.50/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.50 306.50
CBN SMIS 362.52 362.52
I&E FX Window 363.96 364.33
Cash Market 360.10 360.20
Transfer Market 363.50 363.50



The NGERIA sovereigns reversed some of its recent gains in today’s session, as news of approval of a c.$2.8bn Eurobond issuance by the Nigerian Senate filtered into the market. Yields were higher by c.5bps, with the most losses seen on the 20-yr (2038) which lost c.0.50pct on the day.               

Demand for the NGERIA Corps remained relatively muted, except for continued interest on the DIAMBK 19s and late bids seen on the SEPLLN 23s.

Proshare Nigeria Pvt. Ltd.

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