Thursday, September 05, 2018 /10:26PM / Zedcrest Capital

KEYINDICATORS

Bonds

TheFGN bond market remained largely order driven in today’s trading session asLocal Pension Funds and Asset managers continuedto look for decent bargain onmaturities with attractive yields. We witnessed significant trading activitiesmostly at the long-end, with more trading volumes skewed towards the 2036s& 2037s maturities. Consequently, yields across the curve compressed byc.5bps to close at 15.06% on the average.

Weexpect the market to trade cautiously tomorrow, with wide bid/offer spreads dueto the recent yield increase on the longest offered OMO T-bills (182days) bythe CBN.

Source: Zedcrest Dealing Desk

Treasury Bills

The T-bills market traded on a slightlybearish note today with most trading activities skewed towards the short end ofthe curve. The medium to long end of curve remained muted due to the floatationof another OMO auction by the Central Bank of Nigeria (CBN).

The Apex Bankfloated another OMO auctiontoday in a bid to mop up inflows from corresponding maturing OMO T-bills andlingering excess cash from FAAC disbursements. The CBN eventually succumbed toinvestor pressure for higher yields amidst weak subscription, raising the stoprate for the longest offered tenor (182days) to 12.50% (from 12.15% offeredpreviously). A total of N137.59bn was sold across the 63-, 126- and 182-daymaturities offered with stop rates printing at10.00%. 11.50% and 12.50%respectively.

The shift in stop rates at the OMO auction willlikely lead to bearish sentiments in T-bills market especially at the medium tolong end of the curve.  We expect alethargic trading session tomorrow to wrap up for the week.

Secondary Market TreasuryBills

Source: Zedcrest DealingDesk

Money Market

Interbanklending rates remained relatively stable, as the OBB and OVN closed at 3.00%and 3.83% respectively. System liquidity is estimated to close today at c.N600bnnet positive after the sale of a total of N189.73bn at the OMO auction todaywhich was not sufficient to offset corresponding inflows from N292.52bn OMOmaturities.

We expect ratesto close on a calm note, with no significant outflows expected closing theweek. This is however barring another OMO auction by the CBN due to the highsystemic liquidity.

Source: FMDQ, Zedcrest Researc h

FX Market

The Naira/USD rate traded stable at theinterbank, closing at N306.20/$ (Unchanged DoD). At the I&E FX window, atotal of $396.47mn was traded in 334deals, with rates ranging between N353.00/$- N364.50/$. The NAFEX closing rate appreciated by c.0.09% to N362.73/$ from N363.04/$previously.

At the parallel market, the cash rate closedat N359.50/$ (c.0.08% lower), while the transfer rate remained stable atN362.00/$.

Source: CBN, FMDQ, REXEL BDC

Eurobonds

The bearishsentiments on SSA sovereign bonds calmed today after being under attack sincethe start of the month, and theNGERIASovereignssaw better buyers on the day. Yields compressed by c.13bps, toclose at 7.43% on the average across the curve.

The NGERIA Corpssaw mixed tradingsentiments at today’s session, as demand continued on the short-dated tickerswhile the longer-dated securities traded bearish.The GTBANK 18s gained 14bpsDoD, while the FIDBAN 22s conversely lost 14bps DoD.