Funding Rates Moderate Slightly as CBN Holds off on OMO


11, 2018/ 05:30PM / Zedcrest Capital

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


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 $43.05bn 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



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





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


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

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.


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