DAILY MARKET REPORT: FIXED INCOME, MONEY MARKET AND FX – August 17, 2017

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News Update:

As part of efforts to further strengthen the value of the Naira on the parallel market segment of the foreign exchange (forex) market, the Central Bank of Nigeria (CBN) has directed that payments for port charges to the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) by oil marketing companies should henceforth be accommodated in the official Forex window. – ThisDay

ECONOMIC INDICATORS
Inflation (YoY)16.10%
Exchange Rate ($)N305.65
MPR14.00%
Foreign Reserves$31.36Bn
Brent Crude$50.65

“The FGN Bond market witnessed further bullish retracements today with significant yield declines witnessed across the curve especially on the 19s (-16bps) and 27s(-15bps), due to renewed demand for bonds at current yield levels. Average bond yield declined by -9bps, a 5bps improvement from the -4bps recorded yesterday. We expect the market to maintain a slightly bullish posture tomorrow as investors anticipate further compres- sion of the yield curve ahead of the bond auction scheduled for August 23.

The T-bills market also traded on a bullish note as demand flowed into the market in anticipation of inflows from OMO maturities (c.N168bn) and Retail FX refunds by the CBN. Average T-bills yield consequently declined by –28bps(est.). The OBB and OVN rates eased lower to close at 20.83% and 22.42%, as there was no significant change in market liquidity from previous day’s level. We expect rates to trend downward tomorrow due to the anticipated inflows into the market.
Results from today’s PMA showed that the CBN sold a total of N32billion (91day) and N30billion (182 day) NTBs, with rates clearing at 13.35% and 17.35% respectively. The next PMA would be held on the 30th of August, with about N193billion maturing NTBs to be rolled over.”

FGN Bonds
DescriptionBid (%)Offer (%)Day Change (%)
16.00 29-Jun-1916.8716.80(0.16)
15.54 13-Feb-2016.6016.53(0.10)
14.50 15-Jul-2116.4816.41(0.12)
16.39 27-Jan-2216.4316.36(0.03)
14.20 14-Mar-2416.3516.28(0.07)
12.50 22-Jan-2616.4716.40(0.07)
16.29 17-Mar-2716.4816.41(0.15)
12.15 18-Jul-3416.4616.39(0.02)
12.40 18-Mar-3616.5016.43(0.07)
16.25 18-Apr-3716.5616.49(0.08)
Treasury Bills
DescriptionBid (%)Offer (%)Day Change (%)
2-Nov-1720.0019.750.00
7-Dec-1719.4019.150.00
4-Jan-1819.4519.200.15
1-Feb-1818.8518.60(0.40)
1-Mar-1819.0018.75(0.10)
5-Apr-1818.9018.65(0.25)
3-May-1818.7018.45(0.05)
14-Jun-1818.5018.250.00
5-Jul-1818.6518.400.00
2-Aug-1818.3518.10(0.05)

 

Money Market Rates
 Current (%)Previous (%)
Open Buy Back (OBB)20.8327.33
Overnight (O/N)22.4229.25
FX Market
 Current (N/$)Previous ( N/$)
CBN Spot305.65305.65
CBN SMIS320.00320.00
I&E FX Window359.69362.38
Parallel Market366.50366.00
                             Primary Market Auction  Results                                
NTB  – 17 August 2017
TenorRate (%)Offer (N’bn)Sub (N’bn)Sale (N’bn)
91 days13.3532.4433.0432.44
182 days17.3530.0034.7530.00
364 days
FGN Bonds – 23 August 2017
TenorOffer (N’bn)Expected Stop Rate (%)
Jun-2135.00TBA
Mar-2750.00TBA
Apr-3750.00TBA
OMO – 15 August 2017
TenorRate (%)Offer (NBn)Sub (N’bn)Sale (N’bn)
191 day17.955.000.080.08
359 day18.5520.0025.2925.29

 

Eurobonds
IssuerDescriptionYield (%)Day Change (%)
FGN6.38 12-Jul-235.580.00
FGN7.875 16-Feb-326.840.00
First Bank6.488 23-Jul-2110.550.00
Eco bank8.75 14-Aug-2111.510.00
Access Bank10.50 19-Oct-218.26(0.03)
Zenith Bank7.375 30-May-227.48(0.01)
UBA7.75 8-Jun-228.200.00

 

Sources: FMDQ, CBN, Bloomberg, Rexel BDC, Zedcrest research