Coupon Payments to Sustain Demand Interests on FGN Bonds

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 July 12th, 2019.

***Ecobank Nigeria Reports Early Redemption of $250m, 2021 Note***

Key Indicators

Bonds: The FGN Bond market traded on a relatively stable note, with yields marginally lower by c.1bp. This was in contrast to the significant downtrend in yields witnessed in the previous session, where market players reacted to the revised SDF guidelines by the CBN.

In the coming week, we expect yields to remain relatively stable, with coupon payments worth c.N100bn on the FGN 2021 and 2034 bonds expected to sustain investors’ demand for bonds in the market. Market players are however cautious with yields at current levels, as we await release of the Q3 FGN bond calendar by the DMO.

Treasury Bills: The T-bills market remained slightly bullish, with improved offers witnessed on some mid and long tenors (Mar – Jul), as the declining rates found support at 11.00% on that end of the curve.

We, however, expect rates to remain depressed in the near term, due to the continued absence of an OMO auction by the CBN.

Money Market: Rates in the money market dipped further by c.1pct, on the back of the robust system liquidity levels from the OMO maturities in the previous session. The OBB and OVN rates consequently ended the session at 2.21% and 2.93%, with system liquidity estimated to close the week at N334 billion positive.

We expect rates to remain relatively stable in the coming week, barring a resumption in OMO by the CBN.

FX Market: At the interbank, the Naira/USD rate remained stable at N307.00/$ (spot) and N357.52/$ (SMIS). The NAFEX rate at the I&E window rose marginally higher by 3k to N360.79/$. At the parallel market, the transfer rate dipped by N1 to N361.50/$, while the cash rate remained stable at N358.50/$.

Eurobonds: The NIGERIA Sovereigns weakened slightly, with yields marginally higher by c.4bps, following a slowdown in demand interests from the firm rally witnessed post the ‘Powell comments’ on the possibility for a FED rate cut later this month.

In the NIGERIA Corps, Ecobank announced it will call back its bonds totaling $250m and maturing in 2021 on the 14th of August 2019. Demand interests remained sustained across other tickers, with the FIDBAN 22s the most on bid.


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.


Source: Nairametrics

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