Market Players Rally FGN Bonds in Final Pre-election Bets

February 15, 2019/Zedcrest Capital

***Inflation Moderates by 7bps to 11.37%*** – NBS


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 $42.88bn As at February 12, 2019. A c.0.01% decrease from $42.89bn on February 12, 2019
Brent Crude $65.58pb As at February 14, 2019. A c.2.94% increase from $63.71pb on February 13, 2019


The Bond Market maintained a firmly bullish trend as market players sustained demand on the mid to long end of the curve. Offers pulled further apart especially on the long end of the curve as market players retained sentiments for a bullish run post-election. Yields were consequently lower by c.9bps on the day, while the average bid-ask spread widened to 30bps from 19bps previously.

We are cautiously optimistic on the outcome of the presidential elections tomorrow, and we consequently project a relative stability in the market opening next week.

Benchmark FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
14.50 15-Jul-21 15.09 14.54 0.07
16.39 27-Jan-22 14.34 14.11 (0.61)
14.20 14-Mar-24 14.60 14.37 (0.01)
12.50 22-Jan-26 14.68 14.43 (0.02)
16.29 17-Mar-27 14.67 14.59 (0.09)
13.98 23-Feb-28 14.78 14.69 (0.07)
12.15 18-Jul-34 14.62 14.11 (0.04)
12.40 18-Mar-36 14.61 14.28 (0.03)
16.2499 18-Apr-37 14.49 14.16 (0.04)

Source: Zedcrest Dealing Desk 

Treasury Bills

The T-bills market traded on a slightly bullish note, with yields compressing by c.15bps, following slight demand especially on the short end of the curve, in absence of an OMO auction by the CBN.

We expect yields to remain slightly elevated opening the new week, with system liquidity expected to remain under pressure from the weekly wholesale FX sale by the CBN.

Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
14-Mar-19 12.00 11.85 0.00
4-Apr-19 13.10 12.90 (1.90)
2-May-19 12.00 11.00 (1.50)
13-Jun-19 13.00 11.00 0.00
18-Jul-19 13.50 12.50 (0.25)
1-Aug-19 12.95 12.75 (0.05)
12-Sep-19 14.60 14.55 0.10
3-Oct-19 14.90 14.75 0.10
14-Nov-19 14.90 14.75 0.00
5-Dec-19 14.90 14.75 (0.05)
2-Jan-20 15.00 14.80 0.00

Source: Zedcrest Dealing Desk 

Money Market

Rates in the money market remained elevated as a retail FX auction by the CBN kept system liquidity relatively depressed at c.N30bn est. The OBB and OVN rates consequently ended the session at 15.83% and 17.50% respectively.

We expect rates to trend higher opening next week, due to expected funding for the weekly wholesale FX auction by the CBN on Monday.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 15.83 15.00
Overnight (O/N) 17.50 16.00

Source: FMDQ, Zedcrest Research 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.75/$(spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window however appreciated further by c.0.06% to N361.65/$. At the parallel market, the cash rate crashed to N357.70/$, while the transfer rate remained unchanged at N365.00/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.75 306.75
CBN SMIS 357.10 357.10
I&E FX Window 361.65 361.85
Cash Market 357.70 359.00
Transfer Market 365.00 365.00



The NGERIA Sovereigns traded on a relatively calm note, with mixed trading sentiments witnessed over the course of the session. The profit takers however outpaced the buyers, with yields ticking marginally higher by c.4bps on the day.

In the NGERIA Corps, we witnessed slight interests on the ACCESS 21s Snr and FBNNL 21s.

Proshare Nigeria Pvt. Ltd.

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