Funding Rates Moderate Slightly as CBN Holds off on OMO

Culled—Proshare

January 11, 2019/Zedcrest Capital

***NNPC to Crash Price of Cooking Gas***

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 9, 2018. A c.0.00% increase from $43.05bn on January 8, 2018
Brent Crude $60.54pb As at January 11, 2019. A c.0.95% increase from $61.12pb on January 10, 2018

Bonds

The Bond market remained relatively flat in today’s session, except for some buys on the 22s and 26s which compressed yields marginally by c.1bp on average.

We expect buying interests to persist in the market in the coming week, in view of the c.N106bn expected coupon payments on the 2021 and 2034 maturities.

Benchmark FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
15.54 13-Feb-20 15.03 14.57 0.05
14.50 15-Jul-21 15.50 15.22 (0.02)
16.39 27-Jan-22 14.99 14.78 (0.10)
14.20 14-Mar-24 15.10 14.87 0.00
12.50 22-Jan-26 15.56 15.47 (0.04)
16.29 17-Mar-27 15.45 15.39 0.01
13.98 23-Feb-28 15.54 15.41 0.01
12.15 18-Jul-34 15.50 15.30 0.01
12.40 18-Mar-36 15.51 15.40 0.01
16.2499 18-Apr-37 15.39 15.30 0.00

Source: Zedcrest Dealing Desk 

Treasury Bills

The T-bills market remained slightly bearish, with yields inching slightly higher by c.8bps following slight selloff on some short tenured maturities (Feb/Mar).

With system liquidity still in negative territory, we expect yields to remain elevated in the coming week, with the CBN expected to maintain its aggressive OMO stance in view of the c.N560bn in OMO maturities.

Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
14-Feb-19 15.00 13.90 0.00
14-Mar-19 15.10 13.90 0.10
4-Apr-19 14.00 13.50 0.00
2-May-19 14.30 13.00 0.00
13-Jun-19 13.60 13.25 0.00
18-Jul-19 14.00 13.20 0.00
1-Aug-19 14.60 13.65 0.60
12-Sep-19 15.00 14.60 0.00
3-Oct-19 15.05 14.70 0.00
14-Nov-19 15.00 14.70 0.05
5-Dec-19 15.10 14.95 0.00

Source: Zedcrest Dealing Desk 

Money Market

Rates in the money market moderated further by c.2pct to 20.00% and 22.50%, as the CBN held off on OMO, with system liquidity currently at c.98bn negative.

We expect rates to trend slightly higher opening next week, with the banks expected to fund for a wholesale FX intervention by the CBN.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 20.00 22.67
Overnight (O/N) 22.50 24.67

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 by c.0.05% to N364.94/$ from N365.12/$ previously. At the parallel market, the cash rate appreciated by c.0.06% to N360.80/$ while the transfer rate remained unchanged N365.00/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.90 306.90
CBN SMIS 358.31 358.31
I&E FX Window 364.94 365.12
Cash Market 360.80 361.00
Transfer Market 365.00 365.00

Source: CBN, FMDQ, REXEL BDC 

Eurobonds

Investors showed renewed interests on the NGERIA Sovereigns with yields compressing further by c.10bps as Oil prices maintained an uptrend for the 10th straight day.

The NGERIA Corps were relatively quiet except for slight interests on the FIDBAN 22s.

Proshare Nigeria Pvt. Ltd.

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