Breakfast Report - 9 October, 2017
The Week Ahead
At its October Savings Bond Auction, the Debt Management Office would be offering the 2-Year FGN Savings Bond and 3-Year FGN Savings Bond at 12.059% and 13.059% respectively. We note that rates at this auction are significantly lower than September rates of 13.817% and 14.817% respectively, a decline in line with the wider trend of yield moderation in the fixed income market. Considering the lower rates, subscription for the FGN savings bond is likely to remain weak, having declined from ₦1.288 billion in April (rates: 12.794% and 13.794%) to ₦0.413 billion in September.
Amidst firmly improving positive market sentiment, the Nigerian Equity Market ended last week firmly in the green – NSE ASI up 153bps (+249bps w/w). The strong gains notched in the second half of the week pared losses recorded at week open as the NSE ASI rose 249bps w/w.
We expect the positive market momentum to persist at the start of this week, and anticipate further demand on blue chip stocks
Stock Watch: PRESCO has advanced 15% in the last two sessions, rallying to ₦68.00, below consensus target price of ₦80.76. The stock has returned 70% ytd.
We expect demand to remain healthy this week as traders continue to lock in on rates particularly on long dated instruments.
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