Financial Market Update   

28 June 2018 ( Lagos )

Negative tilt in bond market amidst auction 

The Debt Management Office conducted a primary market bond auction yesterday offering N60 billion and selling ?31 billion across the 5-yr, 7- yr and 10-yr bonds at respective stop rates of 13.50%, 13.80% and 13.81%. Following this, Interbank Call rate advanced to 48.33% (previous: 31.57%). 

Sentiment in the bond space turned largely negative amid the auction, with sell-offs observed across most maturities – yields rose 4bps on average across benchmark bonds. Notably, yields on the 15.54% FGN FEB 2020, 14.50% FGN JUL 2021 and 16.2499% FGN APR 2037 bonds advanced 11bps, 14bps and 16bps to settle at 13.38%, 13.69% and 13.96% respectively. Meanwhile, trading in the T-bills space was varied, with yields remaining unchanged on average. Specifically, whilst yields on the 8DTM (-45bps to 12.74%) and 190DTM (-69bps to 12.90%) bills declined, yields on the 36DTM (+24bps to 13.27%) and 260DTM (+39bps to 13.92%) bills advanced. 

With rates rising at the PMA, analysts expect yields in the secondary market of the bonds space to adjust upwards towards PMA rates. Whilst analysts anticipate the CBN coming in to mop-up a N183 billion maturity inflow, they also foresee trading in the fixed income market persisting mixed today barring any external shocks and amidst tightened system liquidity. 

Mixed trading persists on the exchange 

The Nigerian Stock Exchange shed a meagre 6bps on the day following an even split between sector gainers and losers. 

The Industrial Goods (+90bps) sector remained the biggest gainer yesterday, after advances in WAPCO (+243bps) offset losses CCNN (-486bps). Likewise, the Oil & Gas (+30bps) sector notched points on the day following an uptick in TOTAL (+372bps) which outweighed losses in ETERNA (-504bps) and SEPLAT (-15bps). Meanwhile, the Banking (-58bps) and Consumer Goods (-16bps) sectors both lost with declines in ZENITHBANK (-196bps), GUARANTY (-73bps), DANGFLOUR (-238bps), INTBREW (-73bps) and NB (-9bps) dragging the sectors. 

Market breadth remained negative with 12 advances and 36 declines. 

Market Outlook 

Analysts expect the negative trading bias to filter into today’s session even as all market indicators point to sustained weak market sentiment. Notably, analysts highlight the sizable declines on select Banking stocks with heavy volumes and value traded particularly in ZENITHBANK. 

Stock Watch

DIAMONDBNK has shed 12% over the last twelve sessions. The stock currently trades at a price of N1.42 and has declined 5% YTD, coming off a 138% peak as at the 19th of January. 

Corporate Disclosures 

The Board of Directors of Diamond Bank Plc, announced the retirement of the Chairman of the Board, Professor Chris Ogbechie effective March 31, 2018, after the completion of his tenure. The appointment of a New Chairman is almost complete, pending regulatory procedures. 

The Board of Directors of Red Star Express Plc, announced he approval of the financial statements of the Company for the year ended March 31, 2018. The statement will be filed with The Nigerian Stock Exchange on or before June 29, 2018. The Board also accepted the resignation of three Non Executive Directors -Dr. Mohammed Koguna, Mr. Isaac Orolugbagbe and Prof. Chris Ogbechie after their meritorious services to the board. 

The Board of Directors of Japaul Oil and Maritime Services Plc, announced the appointment of Mr. Akinloye Daniel Oladapo as Group Managing Director/Chief Executive Officer. They also approved the appointment of Hon. Abdulkadir Mammon Nasir as an independent Non-Executive Director, Mr. Kingsley Uyokpeyi as Acting Executive Director, Operations and Mrs. Funmilola Omodamori as Executive Director, Finance and Planning. 

Dangote Cement announced the proposed issuance of a Commercial paper to raise capital of up to N150 Billion Naira, whether as a standalone transaction or by way of a programme to be released in tranches, series or proportions. The programme is to be listed on the FMDQ. 

Africa Prudential announced the appointment of Obong Idiong as the new Managing Director/CEO following the retirement of its Managing Director/CEO, Peter Ashade. His resumption is effective July 1, 2018 subject to the approval of the Securities & Exchange Commision. 

Source: Analysts at Vetiva Capital Management Limited.

Reporting for EasyKobo on Wednesday, 27 June 2018 in Lagos, Nigeria

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