FGN Bond Yields Trade Flat, As FG Signals Readiness to Raise Eurobonds with Planned Roadshow


8/11/2018/Zedcrest Capital

***Nigeria to grow by 1.9% due to fewer disruptions in oil production*** – IMF


Indicator Value Commentary
Inflation 11.28% As at October 16, 2018, 5bps up from 11.23% recorded in August 2018.
MPR 14.00% Left Unchanged for the 11th Consecutive Time at the Sept. 25, 2018 MPC Meeting
External Reserves $41.77bn As at November 7, 2018. A c.0.05% decrease from $41.79bn on November 6, 2018
Brent Crude $71.60pb As at November 8, 2018. A c.0.73% increase from $72.13pb on November 7, 2018


The Bond Market remained largely order driven in today’s session, with some picks on the 24s and 26s, while sentiments remained weak on the longer tenured bonds, except for the 2037s which witnessed some buying interests during the session.

Overall, sentiments point towards a further uptrend in yields, mostly due to risk off sentiments from market players and RM clients who have begun to price in possiblities for yields at 16% levels. We however note the possibilty for an FGN Eurobond floatation later this month, which could bolster the Govt’s fiscal position and alleviate domestic funding pressures to some extent.

Benchmark FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
15.54 13-Feb-20 14.58 14.13 0.00
14.50 15-Jul-21 15.27 15.03 (0.02)
16.39 27-Jan-22 15.03 14.17 (0.08)
14.20 14-Mar-24 15.26 15.02 (0.05)
12.50 22-Jan-26 15.61 15.42 (0.02)
16.29 17-Mar-27 15.64 15.43 0.02
13.98 23-Feb-28 15.82 15.69 (0.01)
12.15 18-Jul-34 15.80 15.68 (0.05)
12.40 18-Mar-36 15.69 15.53 0.00
16.2499 18-Apr-37 15.39 15.30 (0.01)

Source: Zedcrest Dealing Desk  

Treasury Bills

Despite the c.N367bn OMO Sale by the CBN in today’s session, the secondary T-bills market remained relatively calm, due to the signifcantly robust system liqudity levels (c.N485bn) which was further bolstered by inflows from OMO maturities (c.N376bn)  and Retail FX refunds by the CBN (c.N150bn est). Yields were consequently flat on the day, except for slight uptick seen on the Feb – Apr maturities.

We expect the market to close the week on a relatively stable note, with a marginal uptick in yields expected on the shorter end of the curve, due to expected outflows for a Retail FX Auction by the CBN.

Benchmark FGN Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
6-Dec-18 12.50 11.85 0.00
3-Jan-19 12.80 12.25 0.00
14-Feb-19 13.00 12.50 0.40
14-Mar-19 13.00 12.20 0.20
4-Apr-19 13.00 12.50 0.25
18-Jul-19 13.00 12.70 0.00
1-Aug-19 13.70 13.00 0.00
12-Sep-19 14.40 14.30 0.05
3-Oct-19 14.50 14.30 0.00

Source: Zedcrest Dealing Desk 

Money Market

The OBB and OVN rates remained relatively unchanged to close the day at 3.67% and 4.25% respectively, as system liquidity was further bolstered by inflows from OMO maturities and retail FX refunds which mitigated outflows for the OMO sale in today’s session. System liquidity is consequently estimated to advance to c.N600bn as at COB today.

We expect rates to inch slightly higher tomorrow, due to expected outflows for the Retail FX auction by the CBN.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 3.67 3.83
Overnight (O/N) 4.25 4.58

Source: FMDQ, Zedcrest Research  

FX Market

At the Interbank, the Naira/USD spot rate remained unchanged at N306.65/$, while the CBN strengthened its SMIS rate to N360.85/$ from N361.45/$ previously. However, at the I&E FX window the NAFEX closing rate depreciated further by c.0.02% to N363.65/$ from N363.58/$ previously.

At the parallel market segment, the cash rate depreciated by 60k to N361.80/$, while the transfer rate remained unchanged at N364.50/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.65 306.65
CBN SMIS 360.85 361.45
I&E FX Window 363.65 363.58
Cash Market 361.80 361.20
Transfer Market 364.50 364.50



The NGERIA Sovereigns witnessed some gains, mostly on the shorter end of the curve, this was however to the exception of the Nov 2047s, which lost some ground gained in the previous session. Yields were consequently lower by c.5bps on the day, following consensus expectations for a hold in rates by the US FED at its MPC meeting today.               

In the NGERIA Corps, clients continued to buy into the dip on the DIAMBK 19s (+1pct), whilst also favouring the FIDBAN 22s and SEPLLN 23s. Investors were however slightly bearish on the FBNNL 21s which lost c.0.35pct on the day.

Proshare Nigeria Pvt. Ltd.



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