March Bond Auction closes at 13.50% amid low sales 

29 March 2019 : The DMO conducted the March Bond Auction yesterday, selling N29 billion (N100 billion offered) across the 5-year, 7-year and 10-year bonds, all at stop rates of 13.50% – lower than the previous month’s auction. Meanwhile, the Interbank Call rate declined 129bps to settle at 15.14%. 

Yesterday, the T-bills space was positive with yields declining 6bps on average. Specifically, yields on the 113DTM and 190DTM bills declined 139bps and 55bps respectively to settle at 11.39% and 13.80%. Meanwhile, buy interest prevailed in the bond market despite the auction, with average yields on benchmark bonds declining 11bps – an adjustment analysts believe was driven by the MPC’s rate cut on Wednesday. Specifically, the yields on the 13.98% FGN FEB 2028 and 12.40% FGN MAR 2036 bonds advanced 1bp and 4bps respectively to settle at 14.31% and 14.39%. 

Given the low sale at the auction and subsequently lowered stop rates, analysts expect to see yields adjust downwards in the secondary market. Similarly, with N22 billion hitting the system in maturities today, analysts expect the CBN to conduct an OMO auction and foresee mild buy interest in the T-bills market. 

Sell pressure intensifies as apathy persists 

Negative sentiment strengthened in the market at mid-week, with the NSE ASI recording another 67bps loss yesterday. Similarly, market activity worsened, as turnover of N1.4 billion printed at less than half of the 30-day average (N3.1 billion). 

Leading the day’s losers, the Banking (-98bps) and Oil & Gas (-84bps) sectors were dragged by declines in GUARANTY (-374bps) and SEPLAT (-182bps). Similarly, the Consumer Goods sector (-39bps) closed down after losses in FLOURMILL (-501bps) and GUINNESS (-242bps). Finally, the Industrial Goods (+3bps) sector was the sole gainer, moving up marginally thanks to CUTIX (+973bps). 

Market breadth remained negative with 11 advances to 21 declines. 

Market Outlook 

With activity remaining weak amid continued investor apathy, analysts expect another negative session today as investor apathy continues to drive market performance. 

Stock Watch

PZ lost 196bps yesterday to close at N10.00, its lowest price since January 2009. The stock has posted a year-to-date loss of 17%, underperforming the Consumer Goods sector (-7% ytd). 

Reporting for EasyKobo on Thursday , 28 March 2019 in Lagos, Nigeria

Source: Vetiva Capital Management Limited