CardinalStone Research - Fixed Income Weekly Review - 22082014

8/11/2019 CardinalStone Research - Fixed Income Weekly Review - 22082014

http://slidepdf.com/reader/full/cardinalstone-research-fixed-income-weekly-review-22082014 1/5

Fixed Income Research

Fixed Income Market Review for the week ended 22 nd August 2014

15 August 2014

NIBOR crashes on the back of maturing bills and FAAC.

Money market rates descended to close lower from previous week’s level.The overnight rate and the 3-month rate moderated to 11.38% and13.35% from 12.13% and 14.06%, in that order. Whilst the market took inover N520 billion inflows from maturing treasury bills and the FederalAccounts Allocation Committee, outflows were N70 billion for the primarymarket auction (PMA) and N111 billion for FX purchases at the RDAS. Atthe PMA, the CBN sold the 91-DTM and 181-DTM bills with stop ratespegged at 9.9% and 10.20% respectively.

JP Morgan listing lures mor e investors to Nigeria’s bond

market.Average bond yields reversed the upward movement of previous week totrend southwards across all maturites. The easing of the liquidity pressureat the interbank lending market may have triggered the upward in pricesacross most benchmark maturities. The u ptrend in bond prices from lastweek’s level was further buoyed by the inclusion of 14.20% FGN MAR 2024instrument to the J.P. Morgan Government Bond Index - Emerging Markets(GBI-EM), in addition to the three other FGN bonds already listed. This waswell reflected in the compression of its yield, as the bond led gains for theweek. The 2024 addition increases Nigeria's weighting in the bond indexto 1.83% at the end of August from 1.65%.

Key events next week.We expect cost of funds to trend lower due to expected inflow of aboutN198 billion from maturing OMO bills which should further supportsystem liquidity. We anticipate renewed offshore interest and proprietarybuilding by local traders ahead of more significant offshore investment aswe move closer towards the August 29 deadline date for the inclusion ofthe March 2024 bond in the JP Morgan Emerging Markets Bond Index. As

such, we expect the buying frenzy to persist.NIBOR WEEK START (%) WEEK END (%) CHANGEOVERNIGHT 12.13 11.38 -75 bps

1 MONTH 13.01 12.79 -22 bps

3 MONTHS 14.06 13.35 -71 bps

6 MONTHS 14.71 14.15 -57 bps

Macroeconomic Snapshot

Exchange Rate -Official (NGN/USD) 155.73

Exchange Rate -Interbank (NGN/USD) 161.95

Exchange Rate -Parallel (NGN/USD) 171.00

O/N NIBOR 11.38%

Monetary Policy Rate (MPR) 12.00%

Crude Oil Price - Brent (USD/barrel) 102.35

Foreign Reserves (Billion USD) 39.59

Inflation Rate (June) 8.30%

GDP Growth Rate 6.21%

Source : FMDQ, CardinalStone Research

Source: FMDQ

ResearchEmail: [email protected] Phone number: +234 704 6126 683SalesEmail: [email protected] Phone number: +234 704 5889 989

Contact

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

13.00%

- 5.00 10.00 15.00 20.00

Y i e l d t o M a t u r i t y

Term to Maturity (inYears)

Yield Curve

mailto:[email protected]












DESCRIPTION COUPON (%) TTM (YRS) BID YIELD (%) OFFER YIELD (%) BID PRICE OFFER PRIC

4.00 23-APR-2015 4.00 0.69 10.90 10.08 95.65 96.15

13.05 16-AUG-2016 13.05 2.00 11.17 11.09 103.25 103.40

15.10 27-APR-2017 15.10 2.70 11.11 11.04 109.00 109.15

9.85 27-JUL-2017 9.85 2.95 11.12 11.06 96.88 97.03

9.35 31-AUG-2017 9.35 3.04 11.12 11.00 95.55 95.85

10.70 30-MAY-2018 10.70 3.79 11.15 11.05 98.60 98.90

16.00 29-JUN-2019 16.00 4.87 11.19 11.12 117.60 117.90

7.00 23-OCT-2019 7.00 5.19 11.30 11.21 83.49 83.79

16.39 27-JAN-2022 16.39 7.45 11.78 11.72 122.40 122.70

14.20 14-MAR-2024 14.20 9.58 11.94 11.89 112.65 112.95

15.00 28-NOV-2028 15.00 14.29 12.54 12.50 116.09 116.39

12.49 22-MAY-2029 12.49 14.77 12.58 12.54 99.34 99.64

8.50 20-NOV-2029 8.50 15.27 12.63 12.57 72.34 72.64

10.00 23-JUL-2030 10.00 15.94 12.20 12.15 84.70 85.00

12.1493 18-JUL-2034 12.1493 19.92 12.13 12.09 100.15 100.45

ISSUER RATING/AGENCY DESCRIPTIONCOUPON

(%)ISSUE VALUE

($'MM)BID YIELD

(%)OFFER

YIELD (%)BID PRICE OFFER PRICE

FGN BB-/Fitch; B+/S&P 6.75 JAN 28, 2021 6.75 500 4.70 4.56 111.24 112.08

BB-/Fitch; BB-/S&P 5.13 JUL 12, 2018 5.13 500 3.90 3.70 104.36 105.10

BB-/Fitch; BB-/S&P 6.38 JUL 12, 2023 6.38 500 5.03 4.92 109.55 110.33

BOND TENOROPENINGYIELD (%)

CLOSINGYIELD (%)

OPENINGPRICE (N)

CLOSINGPRICE(N)

YIELD

CHANGE(%)

PRICE CHANGE(N)

13.05% FGN AUG 2016 3-year 11.31 11.09 103.05 103.40 -0.22 0.35

15.10% FGN APR 2017 5-Year 11.23 11.04 108.75 109.15 -0.19 0.40

16.00% FGN JUN 2019 7-Year 11.46 11.12 116.55 117.90 -0.34 1.35

16.39% FGN JAN 2022 10-Year 12.09 11.72 120.70 122.70 -0.37 2.00

14.20% FGN MAR 2024 10-Year 12.26 11.89 110.75 112.95 -0.37 2.20

10.00% FGN JULY 2030 20-Year 12.14 12.15 85.05 85.00 0.01 -0.05

Weekly Change in Bond Yields and Price (Benchmark Bonds)

FGN Benchmark Bonds

FGN Eurobonds

Source : FMDQ, CardinalStone Research

Source : FMDQ

Source : FMDQ





DESCRIPTION RATING/AGENCYCOUPON

(%)

ISSUEVALUE(N'BN)

TTM(YRS)

RISKPREMIUM

(%)VALUATION

YIELD (%)INDICATIVE

PRICE

14.00 KWARA 5-AUG-2014 A/Agusto 14.00 17.00 0.15 3.29 13.88 99.92

14.00 NIGER 15-OCT-2014 A-/GCR 14.00 6.00 1.02 4.44 15.53 97.22

12.50 KADUNA 31-AUG-2015 A+/Agusto 12.50 8.50 0.63 3.23 14.11 99.68

13.00 EBONYI 30-SEP-2015 A/Agusto 13.00 16.50 1.15 4.46 15.56 98.75

14.00 BENUE 30-JUN-2016 Nil 14.00 13.00 1.15 3.48 14.58 101.38

15.50 IMO 30-JUN-2016 A+/Agusto 15.50 18.50 2.66 5.59 16.71 86.00

10.00 LAGOS 19-APR-2017 A+/Agusto; A+/GCR 10.00 57.00 1.70 1.00 12.16 102.64

13.75 BAYELSA 30-JUN-2017 A-/Agusto 13.75 50.00 3.36 1.79 12.92 102.81

14.00 EDO 31-DEC-2017 A/Agusto 14.00 25.00 2.33 1.80 12.94 102.26

14.00 DELTA 30-SEP-2018 A+/Agusto; A+/GCR 14.00 50.00 4.12 1.00 12.17 105.76

14.00 NIGER II 4-OCT-2018 A-/Agusto; A-/GCR 14.00 9.00 2.53 1.00 12.12 105.22

14.50 EKITI 09-DEC-2018 A/Agusto; A- /GCR† 14.50 20.00 2.53 4.78 15.90 96.41

14.00 NIGER III 12-DEC-2018 A-/Agusto 14.00 12.00 2.91 1.00 12.12 105.58

15.50 ONDO 14-FEB-2019 A/Agusto; A-/GCR 15.50 27.00 2.98 1.00 12.12 108.42

15.50 GOMBE 02-OCT-2019 A/Agusto; A-/GCR 15.50 20.00 5.25 1.00 12.32 108.19

14.50 LAGOS 22-NOV-2019 Aa-/Agusto; AA-/GCR 14.50 80.00 3.04 2.74 13.86 102.16

14.75 OSUN 12-DEC-2019 A/Agusto; A-/GCR 14.75 30.00 3.66 1.00 12.15 107.32

14.75 OSUN II 30-SEP-2020 A/Agusto 14.75 11.40 6.27 1.00 12.63 103.62

13.50 LAGOS IV 27-NOV-2020 Aa-/Agusto; AA-/GCR 13.50 87.00 6.36 1.94 13.60 105.77

15.00 KOGI 31-DEC-2020 A-/Agusto; BBB+/DataPro 15.00 5.00 3.84 1.44 12.60 105.59

14.50 EKITI II 31-DEC-2020 A/Agusto 14.50 5.00 3.87 1.95 13.11 105.53

15.00 NASARAWA 06-JAN-2021 A-/GCR 15.00 5.00 0.15 3.29 13.88 99.92


(%)

ISSUEVALUE(N'BN)

TTM(YRS)

RISKPREMIUM

(%)VALUATION

YIELD (%)INDICATIVE

PRICE

IFC AAA/S&P 10.20 IFC 11-FEB-2018 10.20 12.00 3.49 1.00 12.40 93.92

Sub-national Bonds

Supranational Bond

Source : FMDQ

Source : FMDQ






(%)ISSUE VALUE

($'MM)BID YIELD

(%)OFFER

YIELD (%) BID PRICEOFFERPRICE

Afren PLC I B-/S&P; B/Fitch 11.50 FEB 01, 2016 11.5 450 3.71 2.96 111.45 112.64

GTBank PLC I B+/S&P; B+/Fitch 7.50 MAY 19, 2016 7.5 500 4.66 3.89 104.70 106.04

GTBank PLC II B+/S&P; B+/Fitch 6.00 NOV 08, 2018 6 400 6.17 5.90 99.38 100.35

Access Bank PLC B+/S&P 7.25 JUL 25, 2017 7.25 350 7.03 6.41 100.59 102.30

Fidelity Bank PLC B/S&P; B/Fitch 6.88 MAY 09, 2018 6.88 300 8.69 8.11 94.33 96.08

Afren PLC II B/Fitch 10.25 APR 08, 2019 10.25 300 7.88 7.11 107.35 109.33

Zenith Bank PLC B/Fitch 6.25 APR 22, 2019 6.25 500 6.39 6.09 99.41 100.66

First Bank PLC B/S&P; B-/Fitch 8.25 AUG 07, 2020 8.25 300 8.96 8.71 99.17 100.14

Afren PLC III B+/S&P; B+/Fitch 6.63 DEC 09, 2020 6.63 360 7.26 6.56 103.42 105.92

DESCRIPTION RATING/AGENCYCOUPON

(%)

ISSUEVALUE(N'BN)

TTM(YRS)

RISKPREMIUM

(%)VALUATION

YIELD (%)INDICATIVE

PRICE

11.50 LAFARGE WAPCO 7-OCT 2014 A+/Agusto 11.50 11.80 0.15 1.00 11.81 99.89

13.50 GUARANTY TRUST 18-DEC-2014 Aa/Agusto 13.50 13.17 0.34 5.21 16.26 98.99

17.00 NGC 31-DEC-2014 Nil 17.00 2.00 0.38 8.71 19.74 98.90

10.00 UPDC 17-AUG-2015 Bbb+/Agusto 10.00 15.00 0.52 4.88 15.87 96.0112.00 FLOURMILLS 9-DEC-2015 A-/Agusto 12.00 37.50 0.84 1.00 12.03 100.49

14.00 CHELLARAMS 06-JAN-2016 Nil 14.00 1.50 0.91 2.63 13.67 100.70

13.00 NAHCO 29-SEP-2016 A+/Agusto 13.00 15.00 2.12 1.00 12.39 101.07

14.25 FSDH 25-OCT-2016 A-/Agusto 14.25 5.53 2.20 1.34 12.72 102.80

13.00 UBA 30-SEP-2017 Nil 13.00 20.00 3.13 1.00 12.35 101.60

18.00 C&I LEASING 30-NOV-2017 BBB-/GCR 18.00 0.94 1.94 1.88 13.27 109.08

MPR+7.00 DANA 9-APR-2018 BBB+/DataPro 16.00 8.01 1.90 3.48 14.85 102.20

MPR+7.00 TOWER 9-SEP-2018 A-/DataPro 18.00 3.63 2.07 5.20 16.60 102.64

MPR+5.25 TOWER 9-SEP-2018 AAA/DataPro 16.00 1.00 2.07 5.06 16.46 101.77

14.00 UBA II 22-SEP-2018 A/Agusto 14.00 35.00 4.10 1.35 12.83 103.61

15.75 LA CASERA 18-OCT-2018 Bbb+/Agusto; BBB+/GCR 15.75 3.00 2.17 2.29 13.67 104.15

MPR+5.00 CHELLARAMS II 17-FEB-2019 BBB-/DataPro 17.00 0.54 2.26 6.11 17.48 99.12

16.00 DANA II 1-APR-2019 BBB/GCR 16.00 4.50 3.38 2.16 13.55 106.46

15.25 NAHCO II 14-NOV-2020 A+/Agusto 15.25 2.05 6.25 2.76 14.78 101.81

Corporate Eurobonds

Corporate Bonds

Source : FMDQ

Source : FMDQ





DTM MATURITIES BID DISCOUNT (%) OFFER DISCOUNT (%) BID YIELD (%)

13 4-Sep-14 10.65 10.40 10.69

20 11-Sep-14 10.45 10.20 10.5127 18-Sep-14 10.60 10.35 10.6834 25-Sep-14 10.50 10.25 10.6041 2-Oct-14 10.65 10.40 10.7848 9-Oct-14 10.55 10.30 10.7055 16-Oct-14 10.60 10.35 10.7762 23-Oct-14 10.50 10.25 10.69

69 30-Oct-14 10.55 10.30 10.7676 6-Nov-14 10.10 9.85 10.3283 13-Nov-14 10.60 10.35 10.8690 20-Nov-14 9.75 9.50 9.99

97 27-Nov-14 10.70 10.45 11.01104 4-Dec-14 10.10 9.85 10.40

111 11-Dec-14 10.70 10.45 11.06125 25-Dec-14 10.75 10.50 11.16139 8-Jan-15 10.15 9.90 10.56153 22-Jan-15 10.15 9.90 10.60167 5-Feb-15 10.40 10.15 10.92181 19-Feb-15 10.25 10.00 10.80195 5-Mar-15 10.35 10.10 10.96230 9-Apr-15 10.15 9.90 10.84244 23-Apr-15 10.15 9.90 10.89258 7-May-15 10.15 9.90 10.93349 6-Aug-15 10.25 10.00 11.36

ACRONYM MEANINGNIBOR Nigerian Inter-Bank Offered RateFGN Federal Government of NigeriaIFC International Finance CorporationNAHCO Nigerian Aviation Handling CompanyNGC Nigeria-German CompanyUBA United Bank for AfricaUPDC UAC Property Development CompanyWAPCO West Africa Portland Cement CompanyDTM Days To Maturity OMO Open Market Operations

Analyst Certification As to each security or issuer mentioned in this report, the respective primary research analyst(s) covering that security or issuer hereby certify thattheir views about the issuers and their securities discussed in this report are accurately expressed and that they have not received and will not receivedirect or indirect compensation in exchange for expressing specific recommendations or views in this report.

Treasury Bills

Source : FMDQ

CardinalStone Research - Fixed Income Weekly Review - 22082014

Documents

Transcript of CardinalStone Research - Fixed Income Weekly Review - 22082014