Bearish Sentiment Persists in the Fixed Income Space, as DMO Drops Rates at the T-Bills PMA

Proshare

Thursday, March 12, 2020 / 09:29 AM / By Zedcrest Capital Header Image Credit: ACE Money Transfer


Below are highlights of trading activities in the fixed income and forex market on March 11, 2020

 

FGN Bonds

Yields retraced in the Bonds Market, from yesterday's session, as we saw slight sell-off across the bond curve. The 2049s had the most axes, with market bids being hit during the course of trading, as PFAs and offshore investors exited their long positions, fueled by depressed oil prices and other global economic challenges. Yields expanded by c.83bps across the benchmark bond curve

 

We still expect the bearish trend to continue in tomorrow's session, despite maturities of c.57bn, as global issues persist.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

12.79

6.57

4.34

 

16.39 27-Jan-22

12.37

6.58

0.87

 

12.75 27-Apr-23

12.74

9.50

1.17

 

14.20 14-Mar-24

12.26

9.37

0.16

 

13.53 23-Mar-25

12.70

7.90

1.05

 

12.50 22-Jan-26

12.99

11.99

0.50

 

16.29 17-Mar-27

12.77

11.80

0.30

 

13.98 23-Feb-28

12.77

11.80

0.40

 

12.15 18-Jul-34

12.76

11.93

0.08

 

12.40 18-Mar-36

12.85

12.17

0.45

 

16.2499 18-Apr-37

12.88

12.06

0.24

 

14.80 26-Apr-49

13.42

13.03

0.42

 

 


Treasury Bills

The Treasury Bills market continued its bearish course in today's session, as we saw more selling across the OMO curve. Foreign Portfolio investors remain the main-drivers of the significant supply of OMO bills in the market, as they seek to exit their long positions. Towards the tail-end of trading, we saw some slight improvement in market bids, especially at the long-end of the OMO curve (Jan/Feb). Yields slightly improved by an average of c.3bps across the benchmark OMO curve.


The NTB side recovered slightly, as we saw improved bids across the curve, as banks filled in local customer orders. Yields compressed by an average of c.409bps across the benchmark NTB curve.

At the Primary Market Auction, the DMO sold a total of N86.30bn across the three maturities on offer, at significantly lower rates from the previous auction. The stop rates for the 91-, 182- and 364-day bills cleared at 2.49% (-51bps), 3.78% (-22bps) and 5.30% (-40bps) respectively.

 

Despite OMO maturities coming in, we expect to see more bearish sentiment of OMO bills in tomorrow's session, as the volume of maturing bills (c.57bn) will have a meagre effect on system liquidity.  We also expect the CBN to continue its Thursday trend of floating an OMO auction to mop-up extra cash.

 

Primary Market Auction  Results

 

 

 

 

 

NTB  - 26 Feb 2020

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

91-days

2.49

1.80

23.77

1.80

182-days

3.78

14.00

29.46

14.00

364-days

5.30

70.50

190.23

70.50

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

17.00

11.00

0.00

NGOMO 2-Apr-20

16.80

16.25

(0.20)

NGOMO 14-May-20

17.00

11.00

0.00

NGOMO 4-Jun-20

16.95

11.00

0.70

NGOMO 2-Jul-20

16.90

11.00

0.40

NGOMO 13-Aug-20

17.00

13.00

0.00

NGOMO 3-Sep-20

17.00

13.00

0.00

NGOMO 1-Oct-20

16.90

13.00

(0.10)

NGOMO 3-Nov-20

17.00

13.00

0.00

NGOMO 1-Dec-20

17.00

13.00

0.00

NGOMO 5-Jan-21

15.75

13.30

(1.25)

NGOMO 02-Feb-21

16.90

13.00

0.05

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

4.00

1.00

(5.50)

NIGTB 2-Jul-20

4.50

1.00

(5.00)

NIGTB 1-Oct-20

5.00

2.00

(4.00)

NIGTB 12-Nov-20

5.25

2.25

(3.75)

NIGTB 14-Jan-21

5.70

3.00

(3.30)

NIGTB 11-Feb-21

6.00

2.50

(3.00)

                                                                         

 

Money Market

System liquidity opened with c.180.76bn positive, as interbank rates remained firmly in the double-digit corridor. OBB and OVN rates closed at 12.83% and 13.83% respectively.

 

We expect rates to still remain stable, despite OMO maturities of c.N57bn flowing into the system. We also expect the apex bank to float an OMO to mop up excess liquidity.


 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.83

13.80

Overnight (O/N)

13.83

14.40

 


FX Market

At the Interbank, the Naira/USD spot rate and SMIS rate remained unchanged at N306.95/$ and N358.51/$. The Naira significantly depreciated at the I&E FX window, gaining N1.58k to close at N368.33/$.

At the parallel market, cash and transfer rate significantly depreciated by N15 and N10 to close at N378.00/$ and N380.00/$ respectively.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.51

358.51

I&E FX Window

368.33

366.75

Cash Market

378.00

363.00

Transfer Market

380.00

370.00

 

Eurobond

The NGERIA Sovereign continued its bearish trend, as yields continued to spike across the sovereign yield curve. With no respite in view for depressed oil prices, investors continued to exit their positions in droves.  Yields further expanded by c.56bps across the benchmark yield curve.


The NGERIA Corps tickers fared better in today's session, as yields strengthened among most tracked papers. Yields on SEPLLN 2023s gained the biggest drop c.43bps, while the ACCESS 2021s dipped by c.1bps.

 

 

Proshare Nigeria Pvt. Ltd.




Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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