CBN crashes rates, PMA closes at a record low 

14 March 2019 : The CBN conducted a Primary Market Auction yesterday, selling its full offer of N89.5 billion across the 91DTM, 182DTM and 364DTM at stop rate of 10.7500%, 12.5000%, 12.8450% (Effective rates: 12.26%, 13.33%, 14.73%). Notably, the stop rate on the 1-year bill sold at its lowest rate since August 2018. Meanwhile, the Interbank Call rate declined 25bps to 9.42%. 

As a result of this, yields declined in the T-bills secondary market, with buy-side activity concentrated on mid-to-long dated bills. Consequently, average yields declined 13bps on average. Specifically, the yields on the 148DTM and 316DTM bills declined 66bps and 56bps to settle at 14.29% and 14.93% respectively. Meanwhile, the bond market traded positive with demand noted across the space and average yields on benchmark bonds declining 5bps. Particularly, the yields on the 12.50% FGN JAN 2026 and 16.25% FGN APR 2037 bonds declined 14bps apiece to settle at 14.35% and 14.20% respectively. 

Following the vast oversubscription at yesterday’s PMA (N600.5 billion on an N89.5 billion offered), analysts expect to see strong demand in the treasury bills market today as investors take up the attractively priced bills available. Also, analysts foresee some of this demand trickling into the bonds space, sustaining yesterday’s buy interest. 

Market posts mild recovery, inches up 15bps 

The NSE ASI inched 15bps up yesterday, particularly buoyed by the Consumer Goods sector. 

Recording the highest gains for the day, the Consumer Goods sector (+160bps) closed up as an uptick in NESTLE (+472bps) outweighed losses in DANGFLOUR (-500bps) and GUINNESS (-469bps). Similarly, the Banking Sector (+4bps) recorded minimal gains when STERLNBANK (+977bps) and GUARANTY (+56bps) erased declines in UBN (-214bps) and ZENITHBANK (-67bps). Conversely, the Industrial Goods sector (- 35bs) was dragged by a loss in DANGCEM (-103bps). Finally, the Oil & Gas sector remained flat despite a 909bps gain in ETERNA. 

Market breadth remained negative with 12 advances to 18 declines. 

Market Outlook 

Despite a positive close yesterday, analysts do not foresee a large improvement in market sentiment and expect another negative close tomorrow, with bargain hunting driving a mixed session. 

Corporate Disclosures 

The Board of Directors of UAC of Nigeria Plc is scheduled to meet on Wednesday March 27, 2019 to consider and approve the audited financial statements of the company for the year ended 31 December 2018. There will be a closed period from Tuesday 12 March 2019 until 24 hours after it has been released to the market. 

The Board of Directors of Portland Paints & Products Nigeria Plc has informed the Nigerian Stock Exchange of the resignation of Mr Abdul Bello and Mr Mukhtar Yakasai from the board with effect from 31 December 2018 and 31 January 2019 respectively. 

The Board of Directors of NCR Nigeria Plc has notified the Nigerian Stock Exchange of the appointment of Ms Christiana Nnawo Yisa as a Director and the country manager/ Chief Executive officer of the company with effect from 12 March 2019.

Reporting for EasyKobo on Thursday , 14 March 2019 in Lagos, Nigeria

Source: Vetiva Capital Management Limited