Financial Markets Today
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) today, concluded its third 2-day policy meeting of 2019, retaining all key policy rates, after the rate cut in March. The MPC retained the Monetary Policy Rate (MPR) at 13.50%, the Cash Reserve Ratio (CRR) at 22.50% and Liquidity Ratio at 30% respectively, while maintaining an asymmetric corridor of +200/-500bps around the MPR. This comes on the back of recent positive GDP growth data of +2.01% in Q1 2019, rise in FX reserves at ca $45 billion and continued low global economic growth expectation, with the CBN further emphasizing its current drive to stimulate economic growth in Africa’s 2nd largest economy, and a possible consideration for limiting Deposit Money Banks’ (DMBs) access to government securities in an effort to redirect credit to the real sector.
With continued and gradual rise in FX reserves, continued stability in the FX market, expectation of a reversal in current temporal rise in inflation and continued dovish monetary stance in Developed Economies (DMs), we expect the Central Bank (CBN) to keep current monetary policies in place in the near term.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today at ca ₦265.6bn marginally up from ca ₦259.8bn yesterday. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
The bullish run in the treasury bills secondary market slowed down today with some demand on the short-to-mid dated maturities, and some profit taking along the long end of the curve. Average rates shed ca -7bps day-on-day, with the 5 September 2019 paper trading the most to close at 11.10% from 11.42%.
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates marginally traded lower day-on-day at 4.57% and 5.29% from 5.00% and 5.71%. 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 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
Bonds
The bonds secondary market was quiet today, with very few transactions on select maturities. Average yields gained marginally ca +6bps day-on-day, with April 2037 maturity closing at 14.37%. There will be a Primary Market Auction (PMA) tomorrow with ₦100 billion on offer. Please find below our expectation of stop yields at the auction:
| S/N | AUCTION DATE | MATURITY DATE | AMOUNT OFFERED
(NGN) |
LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 22-May-19 | 27-Apr-23 | ₦35.00 billion | 14.5000% | 13.95% – 14.20% |
| 2 | 22-May-19 | 26-Apr-29 | ₦35.00 billion | 14.5500% | 14.10% – 14.35% |
| 3 | 22-May-19 | 26-Apr-49 | ₦30.00 billion | 14.8000% | 14.25% – 14.50% |
Eurobonds
A quiet session in the nation’s Eurobonds market today. Average yields marginally shed ca -1bps day-on-day with the February 2038 maturity closing at 7.98% from 7.99%.
Equities
The Nigerian equities market closed on a positive note for a 4th consecutive trading day, with the Nigerian Stock Exchange All Share Index (NSE ASI) gaining ca +2.88% day-on-day to close at 30,218.14pts, with the market’s year-to-date returns at -3.86%. This was mainly due to gains in Dangote Cement Plc (+1.14%), MTN Nigeria Plc (+9.96) and Guaranty Trust Bank Plc (+2.96%).
The NSE Banking, Industrial and Oil & Gas indices all gained ca +94bps, +208bps and +53bps respectively, while the Consumer goods index lost -33bps. MTN Nigeria Plc led both the volume and value charts for a 2nd consecutive day with 110.72m units traded at ₦14.58bn.
The Naira remained flat against the dollar in both the interbank and Parallel markets at ₦306.95/$1 and ₦361/$1 respectively. It also remained flat against the Pound sterling and the Euro at ₦471/₤1 and ₦404/€1 respectively in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated to ₦360.18/$1 from ₦360.19/$1.
Crude oil prices traded volatile today, on mixed sentiments of persisting global fears of negative impact of U.S./China trade tensions vs intention of OPEC and its allies to maintain current production cuts till the end of 2019 and on-going Middle East tension between U.S. and Iran. Brent crude oil price was up ca +0.19% day-on-day at $72.11pb, while WTI was unchanged day-on-day at $63.10pb, as at report time. Spot gold was down ca -0.27% at $1,273.80 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 21-May-19 | 20-May-19 | Change in Rates | ||
| 86 Days . | 10.00% | 10.23% | -0.23% | |
| 177 Days- | 12.02% | 12.02% | 0.00% | |
| 345 Days. | 12.35% | 12.35% | 0.00% | |
| Source: FMDQ DQL for 21 April 2019 *T-Bills Discount Rates are slightly different from current market rates |
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| Benchmark FGN Bond Yields | ||||
| 21-May-19 | 20-May-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.39% | 14.41% | -0.02% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.32% | 14.32% | 0.00% | |
| 10 yrs: 13.98% 17 Mar 2027 | 14.35% | 14.23% | 0.12% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.37% | 14.29% | 0.08% | |
| Source: FMDQ DQL for 21 April 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 21-May-19 | 20-May-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.78% | 4.81% | -0.03% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.51% | 5.55% | -0.04% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 6.98% | 6.97% | 0.01% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 7.98% | 7.99% | -0.01% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.56% | 8.56% | 0.00% | |
| Source: FMDQ DQL for 21 April 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.32% 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 |
| 01-Aug-19 | 72 | 9.65% | 9.84% |
| 17-Oct-19 | 149 | 10.70% | 11.19% |
| 07-Nov-19 | 170 | 10.85% | 11.43% |
| 16-Jan-20 | 240 | 11.15% | 12.03% |
| Select Macro-economic Indices | |
| Inflation % (April 2019) | 11.37 (+1.07% ytd) |
| PMI (May 2019) | 57.80 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 72.11(+0.19% d/d) |
| External Reserve (US$’billion) | 45.060 (+2.21% ytd) |
| GDP % (Q4 2018) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 30,218(+2.88% d/d; -3.86% ytd) |
| Market Capitalisation (₦’Trillion) | 13.31 |
Financial Markets Update – 21 MAY 2019
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This document has been issued and approved by AIICO Capital and is based on information from various sources that we believe are reliable. However, no representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer or solicitation to any person to enter into any trading transaction.
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