Funding Rates Remain Elevated as CBN Mops Up OMO Maturities

Thursday, January 10, 2018/ 07:10PM / Zedcrest Capital

***FG Got 132b Naira of Orders for 100b Naira 7-Year
Sukuk*** – DMO

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 7, 2018. A c.0.02% increase from $43.04bn on January
3, 2018

Brent Crude

$61.12pb

As at January 10, 2019. A c.1.71% increase from $60.09pb on January 9, 2018

 

Bonds

The Bond market traded on a relatively quiet note, with yields relatively
unchanged on the day. We have however begun to see better sellers across the
curve and we expect yields to resume an uptrend shortly as market players
anticipate release of the Q1 FGN Bond calendar by the DMO.

 














Benchmark
FGN Bonds

Description

Bid (%)

Offer (%)

Day Change
(%)

15.54 13-Feb-20

14.98

14.78

(0.05)

14.50 15-Jul-21

15.52

15.27

0.01

16.39 27-Jan-22

15.09

14.89

0.00

14.20 14-Mar-24

15.10

14.87

0.00

12.50 22-Jan-26

15.60

15.49

0.03

16.29 17-Mar-27

15.44

15.39

(0.06)

13.98 23-Feb-28

15.53

15.45

0.00

12.15 18-Jul-34

15.49

15.37

(0.01)

12.40 18-Mar-36

15.50

15.31

(0.03)

16.2499 18-Apr-37

15.39

15.30

(0.01)

Source: Zedcrest Dealing
Desk

 

Treasury
Bills

The
T-bills market traded on a slightly bearish note, with yields marginally higher
on the back of the c.N343bn OMO sale by the CBN which mopped up most of the
c.N375bn OMO maturities. The most selloffs were on the Shorter end of the curve
(Jan – Mar), while yields inched higher on the longer end in response to the
new 364-day OMO offering.

We expect
yields to remain elevated as the current tight system liquidity levels are
expected to constrain buying interests in the market, whilst a further OMO
auction would cause yields to trend higher.



















Treasury Bills

Description

Bid (%)

Offer (%)

Day Change
(%)

14-Feb-19

15.00

14.00

(0.50)

14-Mar-19

15.00

14.00

0.00

4-Apr-19

14.00

12.80

0.50

2-May-19

14.30

13.20

0.55

13-Jun-19

13.60

13.30

(0.05)

18-Jul-19

14.00

13.30

0.35

1-Aug-19

14.00

13.65

0.10

12-Sep-19

15.00

14.70

0.05

3-Oct-19

15.05

14.80

0.10

14-Nov-19

14.95

14.70

0.00

5-Dec-19

15.10

14.85

0.10

Source:
Zedcrest Dealing Desk

 

 

 

Money
Market

Rates in the
money market declined marginally by c.3pct, with the OBB and OVN rates closing
the day at 22.67% and 24.67%, as the c.N375bn inflows from OMO T-bills
maturities were mopped up by a c.N343bn OMO sale by the CBN. System liquidity
consequently improved marginally to c.N66bn negative.

We expect rates
to remain elevated as system liquidity remains in Negative territory, with the
possibility for a further OMO sale by the CBN.

 






Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

22.67

26.67

Overnight (O/N)

24.67

27.67

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 depreciated by c.0.06% to N365.12/$ from N364.90/$
previously. At the parallel market, the cash rate depreciated by c.0.14% to N361.00/$
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

365.12

364.90

Cash Market

361.00

360.50

Transfer Market

365.00

365.00

Source: CBN, FMDQ, REXEL
BDC

 

 

Eurobonds

The NGERIA Sovereigns were relatively flat
in today’s session, with yields inching higher by 3bps following slight sell on
the longer end of the curve.

 

The NGERIA Corps were relatively quiet
except for slight interests on the Access and FBNNL 21s.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

 

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3.      T-Bills Market Reverses Bullish Run as Average Rate
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Sales

 Proshare Nigeria Pvt. Ltd.