DAILY MARKET REPORT: FIXED INCOME, MONEY MARKET AND FX – JULY 19, 2017

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“News Update:
The CBN sold a total of N205billion T-bills out of a total of N315billion subscribed by investors at today’s PMA. Rates cleared at 13.425%(91day), 17.3989%(182day) and 18.549%(364day) which were lower than rates at the previous auction which cleared at 13.50%, 17.70% and 18.599% respectively. This was due to increased demand from investors compared to a lower subscrip- tion of N211billion at the previous auction. The CBN will offer another N229billion T-bills at its next PMA on 3rd August as contained in its Q3 T-bills Calendar.”

“Portfolio switch by some PFAs and Local asset managers (sell bonds to buy higher yielding T-bills) triggered bearish sentiments in today’s session with significant selloffs witnessed on the 2020(-13bps), 2024(-7bps) and 2026(- 5bps) bond maturities. Consequently, yields rose by 3bps across the curve. We expect the market to remain bearish tomorrow, however at a slow pace as we expect renewed investors interest at these levels.

The T-bills market opened on a bullish note with demand skewed towards the short end on the backdrop of buoyant money market liquidity. This sentiment extended into the medium and long end of the curve as results from the PMA came out stronger than expected, resulting in an average yield decline of 15bps. We expect the market to remain bullish due to the persistent liquidity in the money market and spill over demand from to- day’s auction.

The OBB and O/N rates declined further in today’s session to close at 4.83% and 5.25% as liquidity conditions in the Money Market remained stable. Market liquidity is estimated at N234billion as at close of business today. In absence of any significant liquidity tightening activity by the CBN, we expect rates to decline further as cash inflows from OMO repay- ments of c.N97billion is expected to further boost liquidity tomorrow.”

ECONOMIC INDICATORS
Inflation (YoY) 16.10%
Exchange Rate ($) N305.35
MPR 14.00%
Foreign Reserves $30.36Bn
Brent Crude $49.47

 

FGN Bonds
Description Bid (%) Offer (%) Day Change (%)
16.00 29-Jun-19 16.73 16.66 0.03
15.54 13-Feb-20 16.61 16.54 0.13
14.50 15-Jul-21 16.34 16.27 0.02
16.39 27-Jan-22 16.18 16.11 (0.01)
14.20 14-Mar-24 16.18 16.11 0.07
12.50 22-Jan-26 16.31 16.24 0.05
16.29 17-Mar-27 16.23 16.16 (0.03)
12.15 18-Jul-34 16.12 16.05 (0.01)
12.40 18-Mar-36 16.12 16.05 0.02
16.25 18-Apr-37 16.28 16.21 0.02
Treasury Bills
Description Bid (%) Offer (%) Day Change (%)
3-Aug-17 16.50 16.25 (1.15)
14-Sep-17 16.15 15.90 (1.30)
19-Oct-17 14.00 13.75 (0.25)
2-Nov-17 18.75 18.50 (0.05)
7-Dec-17 18.70 18.45 (0.05)
4-Jan-18 18.75 18.50 0.00
1-Feb-18 18.35 18.10 0.15
1-Mar-18 18.60 18.35 (0.10)
5-Apr-18 18.65 18.40 (0.05)
3-May-18 18.55 18.30 (0.10)
14-Jun-18 18.55 18.30 (0.15)
5-Jul-18 18.50 18.25 (0.10)

 

Eurobonds
Issuer Description Yield (%) Day Change (%)
FGN 6.38 12-Jul-23 5.86 (0.05)
FGN 7.875 16-Feb-32 6.91 (0.05)
First Bank 6.488 23-Jul-21 10.71 (0.11)
Eco bank 8.75 14-Aug-21 11.94 0.02
Access Bank 10.50 19-Oct-21 8.51 0.01
Zenith Bank 7.375 30-May-22 7.93 (0.02)
UBA 7.75 8-Jun-22 8.79 (0.03)

 

Money Market Rates
  Current (%) Previous (%)
Open Buy Back (OBB) 4.83 5.00
Overnight (O/N) 5.25 5.67
FX Market
  Current (N/$) Previous ( N/$)
Interbank 305.35 315.00
CBN SMIS 320.00 320.00
I&E FX Window 367.60 363.57
Parallel Market 364.50 364.50
Primary Market Auction  Results
NTB  – 19 July 2017
Tenor Rate (%) Offer (N’bn) Sub (N’bn) Sale (N’bn)
91 days 13.4250 36.79 33.61 32.40
182 days 17.3989 39.18 27.43 26.60
364 days 18.5490 129.00 254.24 145.96
FGN Bonds – 12 July 2017
Tenor Rate (%) Offer (N’bn) Sub (N’bn) Sale (N’bn)
Jun-21 16.2400 35.00 9.10 3.90
Mar-27 16.2500 50.00 55.31 47.01
Apr-37 16.2514 50.00 64.75 55.05
OMO – 18 July 2017
Tenor Rate (%) Offer (NBn) Sub (N’bn) Sale (N’bn)
198 day 17.94 10.00 10.75 10.00
345 day 18.55 50.00 31.28 31.28

Sources: FMDQ, CBN, Bloomberg, Zedcrest research

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