KEY INDICATORS
Indicator
|
Value
|
Commentary
|
Inflation
|
12.56%
|
As at June
2020. A 16bps increase from 12.40% recorded in May 2020
|
MPR
|
12.50%
|
As at the July 20, 2020 MPC Meeting.
Maintained at 12.50%
|
External
Reserves
|
$35.99bp
|
As
at Jul 23, 2020. A c.0.05% change from $36.01bp on Jul 22, 2020
|
Brent
Crude
|
$42.93pb
|
As
at Jul 27, 2020. A c.2.20% decrease from $43.90pb on Jul 24, 2020
|
The
FGN bonds space opened the week on a very hushed tone as yield continued to
drop across the benchmark curve. With the bulls still in the market, one would
have expected exciting actions, however, we saw them scramble for bonds at a
very slow pace while hoping for more profit-taking actions from the bears which
might aggress slight uptick in yield.
Few
of the market actions were on the 2026s and 2035s bond with trades settling
around 5.45% and 8.90% on both bonds respectively. The 2049s and 2050s on the
other were largely quoted at 9.75%/9.67% for the most of the trading session
albeit few trades consummated at those levels. Subsequently, the average yield
on the benchmark curve compressed by c.4bps compared to Friday’s closing.
For
tomorrow, we expect the market to continue to trade at this pace although most
of the actions would most likely be skewed towards the longer-dated papers,
with exception to the shortest-dated auction paper (2026 maturity).
Benchmark FGN Bonds
|
||||
Description
|
Bid (%)
|
Offer (%)
|
Day Change (%)
|
|
16.39 27-Jan-22
|
3.72
|
2.65
|
(0.02)
|
|
12.75 27-Apr-23
|
4.01
|
3.50
|
(0.18)
|
|
14.20 14-Mar-24
|
4.03
|
3.29
|
(0.00)
|
|
13.53 23-Mar-25
|
5.00
|
4.02
|
0.00
|
|
12.50 22-Jan-26
|
5.91
|
5.19
|
(0.09)
|
|
16.29 17-Mar-27
|
7.09
|
6.44
|
0.00
|
|
13.98 23-Feb-28
|
7.27
|
6.00
|
(0.07)
|
|
14.55 26-Apr-29
|
7.95
|
7.39
|
0.19
|
|
12.15 18-Jul-34
|
8.97
|
8.05
|
0.00
|
|
12.40 18-Mar-36
|
9.02
|
8.54
|
(0.10)
|
|
16.2499 18-Apr-37
|
9.21
|
9.04
|
(0.13)
|
|
14.80 26-Apr-49
|
9.85
|
9.63
|
(0.04)
|
|
Treasury Bills
At
the OMO space, it was a dull day for the bulls as we saw market offers dried up
due to the non-issuance of OMO by the APEX bank despite the robust system
liquidity available to gulp large bill sizes. The trading session opened the
day one-way all bids and no offer across the benchmark curve, however, by
mid-day, we saw slight actions on December and January bills albeit in low
volumes with trades settling at 3% mid. At the long-end, we saw most of the
market bids for May/June bills at 4.80% with no offer to match for a trade.
Consequently yields compressed by an average of c.9bps on the benchmark curve.
For
tomorrow, rates will most likely drop further, and offers remain scarce as the
bulls continue to scramble to invest in the few bills available to buy.
Benchmark OMO Bills
|
|||
Description
|
Bid (%)
|
Offer (%)
|
Day Change (%)
|
NGOMO 8/13/2020
|
1.50
|
0.01
|
0.00
|
NGOMO 9/3/2020
|
5.50
|
0.01
|
0.00
|
NGOMO 10/1/2020
|
6.00
|
0.01
|
0.00
|
NGOMO 11/03/2020
|
6.00
|
0.01
|
0.00
|
NGOMO 12/01/2020
|
6.50
|
0.01
|
0.00
|
NGOMO 02/02/2021
|
6.80
|
1.00
|
(0.20)
|
NGOMOB 0 03/02/21
|
6.80
|
1.00
|
(0.20)
|
NGOMOB 0 03/02/21
|
6.80
|
1.00
|
(0.20)
|
NGOMOB 0 05/11/21
|
6.80
|
1.00
|
(0.20)
|
Benchmark NTBills
|
|||
Description
|
Bid (%)
|
Offer (%)
|
Day Change (%)
|
NIGTB 10/1/2020
|
3.00
|
0.01
|
0.00
|
NIGTB 11/12/2020
|
3.00
|
0.01
|
0.00
|
NIGTB 01/14/2021
|
3.50
|
0.10
|
0.00
|
NIGTB 02/11/2021
|
3.50
|
0.10
|
0.00
|
NIGTB 04/29/2021
|
3.50
|
0.10
|
(0.50)
|
NIGTB 05/13/21
|
3.50
|
0.10
|
(0.50)
|
NIGTB 06/10/21
|
4.00
|
0.10
|
0.00
|
Money Markets
The
robust interbank system liquidity of +c.N604.45BN continues to tapper down
rates with no major funding need to drag rates upward. OBB and OVN rates lost
approx. 22% compared to Friday’s levels closing the day at 1.13% and 1.88%
respectively.
With
no significant funding pressures and reduced probability of an OMO auction, we
expect the market rate to remain around this level at the interbank trading
session tomorrow.
Money
Market Rates
|
||
Current
(%)
|
Previous
(%)
|
|
Open Buy Back (OBB)
|
1.13
|
1.60
|
Overnight (O/N)
|
1.88
|
2.20
|
FX Market
The I&E FX window remained less active as
the market volumes continue to dwindle while participants stayed bided between
N385.00/$ and N389.00/$, causing the closing rate to depreciate by 0.06% from
Fridays’ closing.
At the cash and transfer window, FX pressure
continues to mount as the shortage of supply took a major toll in that space
with Naira depreciating by an average of N1.5k for both markets closing the day
at N473/$ and N474/$ respectively.
FX
Market
|
||
Current
(N/$)
|
Previous
( N/$)
|
|
CBN Spot
|
381.00
|
381.00
|
CBN SMIS
|
380.69
|
380.69
|
I&E FX Window
|
389.25
|
389.50
|
Cash Market
|
473.00
|
471.00
|
Transfer Market
|
474.00
|
473.00
|
Eurobonds
The NGERIA Sovereign tickers opened the week better
offered, with less aggressive bids seen across the curve, especially for the
mid and longer-dated papers. By and large, yield expanded by an average of
c.7bps across the curve. At the SSA space, Angola’s bond continued to gain
positive vibes following the announcement by Finance minister on their
government intentions to participate in the G20’s debt service suspension
Initiative. Although we saw no immediate reactions in the Angola bonds, offer
prices reprised higher by the close of the business especially on the 25s and
28s papers.
At NGERIA Corps tickers had a mixed
session, with a few of the tracked papers moving in opposite directions based
on the market interest. Yields on the Zenith 22s and SEPPLN 23s headed south to
lead the pack compressing by -11bps and -10bps respectively while the ACCESS
21s headed north expanding by a whooping +59bps.
Contact us:
Dealing
Desk: 01-6311667 Email: research@zedcrestcapital.com
Disclaimer:
Whilst proper and reasonable care has been taken in the preparation and
accuracy of the facts and figures presented in this report, no responsibility
or liability is accepted by Zedcrest Capital or its employees for any error,
omission, or opinion expressed herein. This report is not a piece of investment
advice or a research recommendation and should not be regarded as such. The
information provided herein is by no means intended to provide a sufficient
basis on which to make an investment decision.
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