T-Bills Market Trades Bearish as Market Players anticipate Retail FX Funding

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Zedcrest Capital

*** Nigeria generates N808bn from VAT in 9 months*** – NBS

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 12thConsecutive Time at the Nov. 22, 2018 MPC Meeting
External Reserves $43.07bn As at January 2, 2018. A c.0.07% decrease from $43.12bn on December 31, 2018
Brent Crude $55.47pb As at January 3, 2019. A c.0.00% decrease from $55.51pb on January 2, 2018

 

Bonds

The Bond Market compressed marginally by c.3bps in today’s session, following slight interests on the 26s, 27s and 37s. Yields however remained much unchanged on other maturities.

We expect the market to close the week on a relatively quiet note, with an outlook for relatively higher yield levels in the coming week.

Benchmark FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
15.54 13-Feb-20 15.24 14.73 (0.05)
14.50 15-Jul-21 15.73 15.43 0.01
16.39 27-Jan-22 15.12 14.77 0.00
14.20 14-Mar-24 15.17 14.95 0.00
12.50 22-Jan-26 15.68 15.63 (0.07)
16.29 17-Mar-27 15.59 15.51 (0.04)
13.98 23-Feb-28 15.69 15.54 0.00
12.15 18-Jul-34 15.64 15.40 (0.01)
12.40 18-Mar-36 15.69 15.42 (0.01)
16.2499 18-Apr-37 15.49 15.38 (0.08)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The T-bills market traded on a bearish note with yields rising by c.12bps on average, following sell pressures on the shorter end of the curve in the wake of the OMO auction (c.425bn) by the CBN.

We expect the market to remain bearish tomorrow, as market players would be looking to provide funding for a retail FX intervention sale by the CBN.

Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
14-Feb-19 15.50 13.00 0.00
14-Mar-19 17.00 14.50 0.00
4-Apr-19 13.50 11.00 0.00
2-May-19 13.00 12.50 0.00
13-Jun-19 13.50 12.50 0.00
18-Jul-19 14.00 13.00 0.00
1-Aug-19 14.50 14.00 0.00
12-Sep-19 15.00 14.00 0.00
3-Oct-19 15.00 14.00 0.00
14-Nov-19 14.90 14.60 0.00
5-Dec-19 15.05 14.90 0.00

Source: Zedcrest Dealing Desk 

 

Money Market

Rates in the money market declined by c.4pct, with the OBB and OVN rates closing the day at 14.08% and 14.92%, as inflows from Net OMO and PMA repayments (c.N265bn) bolstered system liquidity to c.N385bn est. from c.N120bn opening the day.

Rates are expected to trend higher tomorrow, as the CBN is expected to debit banks for a retail FX interventions sale which estimated to mop up most of the available system liquidity.

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 14.08 18.33
Overnight (O/N) 14.92 19.42

Source: FMDQ, Zedcrest Research  

 

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (spot) and N358.13/$ (SMIS), while the NAFEX rate in the I&E window depreciated further by c.0.24% to N365.30/$ from N364.41/$ previously. At the parallel market, the cash rate depreciated slightly by c.0.06% to N359.00/$, while the transfer rate remained unchanged at N364.00/$.

FX Market
  Current (N/$) Previous ( N/$)
CBN Spot 306.95 306.95
CBN SMIS 358.31 358.31
I&E FX Window 365.30 364.41
Cash Market 359.00 358.80
Transfer Market 364.00 364.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns were flat except for slight interests seen on the 2047s and 2049s.

In the NGERIA Corps, investors slightly bullish on the DIAMBK 19s, Access 21 and FBNNL 21s, whilst we witnessed slight selloff on the FIDBAN 22s.

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