Zenith Bank 2022 Redemption: Another in A Long Line of Nigerian Eurobond Buy-Backs in 2019


By Zedcrest Capital




The Bonds market ended the week on a muted note, with relatively low volumes again traded during the trading session. Yields across the benchmark curve compressed by c.1bps as investors apathy for current market yields continued. We however noted some improved interest in corporate and municipal bonds, as locals continue to hunt for yields at higher levels.


We expect improved demand for yields, most notably at the short-end of the curve, as investors look reinvest coupon payments expected during the week.


Treasury Bills

Bearish sentiments in the T-bills market were sustained in the final trading session of the week, as market participants sold off the short-dated maturities to fund for the CBN Retail FX auction. Yields consequently expanded further by c.7bps on the average across the NTBills curve.


With OMO maturities and FGN Bond coupons expected to hit the system in the coming week, we anticipate OMO auction(s) floated by the CBN to tackle excess liquidity. We expect supply from the OMO CBN to keep yields sustained at current levels at the long-end of the NTBills curve.


Money Market

Funding for Retail CBN FX intervention amidst tight system liquidity saw money market rates close the week at even higher levels. OBB and OVN rates ended the week to close at 22.43% and 22.71% respectively.


We anticipate money market rates to subside going into the coming week as FGN Bond coupon payments (c.N142bn) and OMO maturities (c.N356bn) provide some liquidity respite for market participants. We also expect the CBN to float at least an OMO auction to manage excess liquidity.


FX Market

At the interbank, the Naira/USD spot rate lost 5k to close at N306.90/$ while the SMIS rates remained stable at N358.02/$ respectively. At the I&E window, the cash rate for the Naira gained 10k to close the week at N357.60/$ while the transfer rate saw no change, closing at N362.50/$.



Profit taking in today’s session saw the NGERIA Sovereigns close the week on a negative note. We noted better sellers across the sovereign curve, as yields expanded by c.12bps on the average.


Zenith Bank successfully bought back 79% of its issued Eurobond maturing 2022, repayments to be funded on Monday, September 16, 2019. This makes the fourth Nigerian financial institution this year to repay its dollar denominated debt early, following Access Bank, First Bank and Ecobank.

The initial market reaction to this was positive, we noted demand for other NGERIA Corps papers as investors sought to reinvest their cash. However markets eventually closed lower across the tracked tickers, as investors evaluate the possibility of further buybacks.


Contact us:

Dealing Desk: 01-6311667 Email: research@zedcrestcapital.com


Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment advice or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision


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