Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.
This report is dated May 19th, 2019.
***US FED left benchmark rates unchanged, does not expect to cut rates until 2020***
Bonds: It was a quiet trading session for the FGN Bond Market, with little volumes seen across the curve. We witnessed demand for short-dated maturities, most notably the 2021 maturity which gained +46bps on the day. Bids at across the mid- to long-end of the curve closed higher causing yields to compress by a single basis point on the average across the benchmark bond curve.
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As issuances of corporate debt continue to provide competition for use of funds, we expect institutional investors to adopt a cautious approach to bonds in the near term.
Treasury Bills: The bullish run in the Treasury Markets remained in today’s session, as yields across the Benchmark NTB curve compressed further by c.9bps on the average. Demand peaked across, the mid- to long-dated maturities, as investors chased available yields.
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At the PMA, the DMO rolled over a total of N17.61Bn in maturing treasury bills across three maturities. The stop rates were closed lower for the 91- and 182- and 364-day tenors at 9.60% (+40bps), 11.89% (+6bps) and 12.02% (+32bps) respectively. Demand again was skewed to 364-day tenor, with a bid-to-cover ratio of 11.05X.
Following the bullish outcome of today’s auction, we expect the bullish sentiments to remain in the Treasury Bills market as OMO maturities of c.N89bn hit tomorrow.
Money Market: OBB and OVN rates closed the session lower at 6.86% and 7.50% respectively, as system liquidity closed at c.N217bn positive.
We expect rates to moderate later in the week, with c.N89bn expected in OMO maturities this week, with an outside chance for the Apex bank to mop-up maturities with an OMO auction.
FX Market: At the interbank, the Naira/USD rate remained stable to close at N306.95/$ (spot) and N356.92/$ (SMIS), with relatively no change at the I&E window which closed at N360.53/$.
The Naira also held steady at the parallel market, as transfer rate closed unchanged at N362.50/$, while the cash rate appreciated by 20kobo to close at N359.80/$.
Eurobonds: Profit taking activities saw a slowdown in the bullish run of the NIGERIA Sovereigns papers leading up to the US Fed rate decision. The optimism of a trade-war truce looks as well as the US Fed decision reinforcing it’s dovish lean, continue to support Emerging Market assets in the coming weeks.
Yields compressed further by c.8bps on the average across the sovereign curve.
Investor demand for the NIGERIA Corps prevailed in today’s session, as investors position against a drop in yields by exiting callable papers. Demand remained strong for the UBA 2022, FIDBAN 2022 and ETINL 2024, which all gained c.+8bps on the day.
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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 an 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.