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The Market Today - 15 November 2018

Eurobonds roadshow closes with higher rates                                
Following a three-day Eurobond roadshow that closed yesterday, the Federal Government has been able to raise $2.87 billion of external borrowing from the international market. Specifically, the FG offered and sold the 7-($1.12 bn), 12-($1.00 bn) and 30-year ($0.75 bn) bonds at stop rates of 7.63%, 8.75% and 9.25% respectively. With this, Nigeria’s total Eurobond liabilities come to $10.87 billion. More noteworthy is the increase in the cost of foreign borrowing since the previous issue in February, where a 12-yr bond sold at 7.14% - 161bps below current issue. On the other hand, the DMO is set to maintain the pace of domestic borrowing with the recently released November bond circular showing ₦115 billion on offer at this month’s PMA (the same amount offered in October). We note that the government has continued to play by its strategy of rebalancing its debt profile towards longer term and arguably cheaper foreign debt.                                                   

Tepid trading leads market to moderate red close                                                           
The NSE ASI continued its tepid market performance yesterday with a 6bps decline. Market breadth turned positive with 16 advances and 15 declines. We expect the current mixed trading sentiment to persist in today’s session as sustained investor apathy continues to drive varied price movement.                                   

Stock Watch: OANDO has gained 9% in the last 3 sessions to settle at ₦5.05. The stock has lost 16% ytd, underperforming the Oil & Gas sector (-11% ytd).                                                                                           

Investors raid secondary market amid PMA oversubscription                                                    
The CBN held its scheduled PMA yesterday, offering and selling ₦128 billion across the 91DTM, 182DTM and 364DTM bills at stop rates of 10.95%, 13.16% and 14.45% respectively (effective yield: 11.26%, 14.08% and 16.88%). Amid this, the interbank call rate advanced 8bps to settle at 5.75%. We expect today’s OMO maturity of ₦318 billion to support demand in the T-bills space. That said, an open market operation from the CBN could dampen the strength of demand. On the other hand, we expect activity levels to remain mildly positive in the bond space, following the release of November’s bond circular.