Global crude oil prices rose today, reversing some of the losses of the past few volatile trading sessions, of the back of reports of drone attacks on oil pumping installations in Saudi Arabia, world’s 3rd largest oil producer and largest in the Organisation of Petroleum Exporting Countries (OPEC). Brent crude oil price traded at ca $71.4 per barrel today and comes despite quickly escalating trade tensions between the world’s largest economies – U.S. and China, and increasing investor’s fears of global economic slowdown in 2019.
With expectation of continued escalation of U.S./China trade tensions as the U.S. prepares another round of tariffs on ca $300 billion worth of additional Chinese imports after last week’s implementation of a rise in tariffs and retaliatory tariffs from China, we expect continued volatility in global financial markets in the near term, with Brent Crude oil price expected to trade ca $68 – $73 per barrel in the near term.
Banking system liquidity opened positive today at ca ₦133.4bn up from ca ₦121.6bn yesterday, as there was no major funding activity by the banks. The Central Bank of Nigeria (CBN) also did not conduct an Open Market Operation (OMO) auction today.
Bullish sentiments persisted in the treasury bills secondary today, with some demand on the mid-dated maturities. Total volumes traded was low, with average rates shedding ca -5bps day-on-day as the 17 October 2019 maturity closed at 12.33% from 12.40%. There will be a Primary Market Auction (PMA) tomorrow with ₦33.8bn on offer. Please find below our expectation of stop rates at the auction:
|S/N||AUCTION DATE||TENOR||AMOUNT OFFERED
|LAST STOP RATE||EXPECTED STOP RATE RANGE|
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 11.71% and 12.64% from 16.00% and 16.71%. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
The bonds secondary market continued on a quiet note today, with profit taking on select maturities. Average yields gained ca +4bps day-on-day, with the February 2028 maturity closing at 14.43% from 14.29%.
Another bearish day in the nation’s Eurobonds market today, as the market continues to react on-going trade tensions between the U.S. and China which has fueled some risk-off sentiments in emerging markets. Average yields gained ca +4bps day-on-day with the January 2049 maturity closing at 8.71% from 8.67%.
The Nigerian equities market continued on a negative note today, declining for a 7th consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) shedding ca -0.22% day-on-day to close at 28,422.76pts, and market’s year-to-date returns at -9.57%. This was mainly due to losses in Nestle Nigeria Plc (-3.48%) and Seplat Petroleum Development Company Plc (-0.38%).
The NSE Banking and Oil & Gas indices both gained ca +129bps and +68bps while Consumer goods and Industrial indices shed ca -168bps and -57bps respectively. Guaranty Trust Bank Plc led both the volume and value chart with 33.11m units and ₦1.03bn respectively.
The Naira remained flat against the dollar in the interbank at ₦306.95/$1; but depreciated in the parallel market against the Pound sterling, Euro and Dollar at ₦472/₤1, ₦402/€1 and ₦360/$1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated to ₦360.42/$1 from ₦360.48/$1.
Oil prices rose today after Saudi Arabia reported a drone attack on some of its oil pumping stations, raising fears of growing supply shortage. Brent crude oil price rose by ca +1.84% day-on-day at $71.52pb, while WTI gained ca +1.54% day-on-day at $61.98pb, as at report time. Spot gold shed ca -0.41% to close at $1,296.40 per ounce.
|Benchmark T-Bills Discount Rates|
|14-May-19||13-May-19||Change in Rates|
|86 Days .||11.05%||10.97%||0.08%|
|Source: FMDQ DQL for 14 May 2019
*T-Bills Discount Rates are slightly different from current market rates
|Benchmark FGN Bond Yields|
|14-May-19||13-May-19||Change in Yield|
|3 yrs: 16.00% 15-Jul-2021||14.53%||14.40%||0.13%|
|5 yrs: 15.54% 27-Apr 2023||14.07%||14.07%||0.00%|
|10 yrs: 13.98% 23 Feb 2028||14.43%||14.29%||0.14%|
|20 yrs: 16.25% 18-Apr 2037 .||14.29%||14.19%||0.10%|
|Source: FMDQ DQL for 14 May 2019|
|Benchmark FGN EuroBond Yields|
|14-May-2019||13-May-2019||Change in Yield|
|3 yrs: NGERIA 6 3/4 01/28/21||4.96%||4.98%||-0.00%|
|5 yrs: NGERIA 6 3/8 07/12/23||5.74%||5.72%||0.02%|
|10 yrs: NGERIA 6 1/2 11/28/27||7.11%||7.02%||0.09%|
|20 yrs: NGERIA 7.696 02/23/38||8.11%||8.07%||0.04%|
|30 yrs: NGERIA 9.248 01/21/49||8.71%||8.67%||0.04%|
|Source: FMDQ DQL for 14 May 2019|
|AIICO Money Market Fund (AMMF)|
|Net Yield (As at current date)||13.27% per annum|
|Added Benefit||Personal accident insurance cover|
|AIICO Capital Guaranteed Income Note (GIN) Rates p.a.|
|Amount (NGN)||30 Days||60 Days||90 Days||180 Days||364 Days|
|10,000,001 – 50,000,000||10.00||10.50||11.00||12.00||13.00|
|50,000,001 – 100,000,000||11.00||11.25||11.50||12.50||14.00|
|100,000,001 – 400,000,000||12.00||12.25||12.50||13.00||14.50|
|Trading Treasury Bills Rates p.a.|
|Maturity Dates||Tenor (Days)||Discount Rate||Effective Yield|
|Select Macro-economic Indices|
|Inflation % (March 2019)||11.25 (-1.66% ytd)|
|PMI (April 2019)||57.70|
|MPR (%)||13.5 (-5%/+2% around mid-point)|
|Brent Crude Price US$ pbbl||71.52(+1.84% d/d)|
|External Reserve (US$’billion)||44.875 (+2.25% ytd)|
|GDP % (Q4 2018)||+2.38% (Q3 2018: +1.81% y/y)|
|NSE All Share Index (ASI)||28,422.76(-0.22% d/d; -9.57% ytd)|
|Market Capitalisation (₦’Trillion)||10.68|