Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Wednesday, October 23, 2019 / 08:50 AM / By Zedcrest Capital / Header Image Credit: Investing.com
Below are highlights of trading activities in the
fixed income and forex market on October 22, 2019
Bonds
The bullish run in the Bonds market continued for
another consecutive session, most notably at the long-end of the curve. We
witnessed investor's preference for yields over duration available at the long
end of the curve, most notably the 2034s and 2037s which strengthened by +5bps
and 12bps respectively. Rates dropped by an average of c.1bps across the
benchmark bond curve.
We expect this bullish
trend to feed into the bond auction coming up tomorrow to push stop rates lower
across all offered tenors, as maturities of c.N234bn come in.
FGN Bond Auction
Expectation - 25 October 2019 |
||
Maturity |
Offer (N'bn) |
Stop Rate Expectation (%) |
Apr 2023 |
50.00 |
14.10 - 14.25 |
Apr 2029 |
50.00 |
14.15 - 14.30 |
Apr 2049 |
50.00 |
14.40 - 14.55 |
Treasury Bills
The Nigerian T-bills market opened on a bullish note as expected, as we noted interested buyers across the NTBills curve as rates dipped by an average of c.8bps across the benchmark curve. Significant volumes were passed most notably on the 08-Oct-20 maturity (re-issued at the previous day's OMO auction), which closed c.35bps lower from yesterday's stop-rate.
We expect the bullish trend to taper opening tomorrow's session as investors weigh the possibility of another OMO auction by the CBN to mop up bond maturities.
Benchmark
Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14-Nov-19 |
12.00 |
10.50 |
0.00 |
5-Dec-19 |
12.00 |
11.10 |
0.00 |
2-Jan-20 |
12.00 |
10.75 |
(0.25) |
6-Feb-20 |
12.00 |
11.10 |
(0.25) |
19-Mar-20 |
11.90 |
10.50 |
(0.10) |
2-Apr-20 |
12.50 |
11.40 |
(0.10) |
14-May-20 |
12.50 |
11.75 |
0.50 |
04-Jun-20 |
12.50 |
11.50 |
(0.30) |
02-Jul-20 |
12.80 |
12.05 |
(0.10) |
13-Aug-20 |
12.85 |
12.40 |
(0.15) |
3-Sep-20 |
12.90 |
12.25 |
(0.10) |
1-Oct-20 |
13.00 |
12.25 |
0.00 |
Source: Zedcrest DealingDesk
Money Market
Money market rates dropped by an average of c.300bps from yesterday's
close. Market liquidity figures opened with c.N230bn, with little funding
pressures banks. OBB and OVN rates closed today at 4.43% and 5.00%
respectively.
We expect rates to remain at single digits with FGN bond and OMO maturities increasing market liquidity levels.
Money Market
Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
4.43 |
7.21 |
Overnight (O/N) |
5.00 |
7.79 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD spot rate
depreciated by 5k to close at N306.95/$, while the SMIS rates remained
stable at N358.13/$. The I&E FX window closing rate bounced back to close
at N362.11$ (81k stronger from yesterday's close).
The Naira
remained stable at the parallel markets, as both the cash and transfer rates
remained stable at N358.00/$ and N362.50/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.90 |
CBN SMIS |
358.13 |
358.13 |
I&E FX Window |
362.11 |
362.92 |
Cash Market |
358.00 |
358.00 |
Transfer Market |
362.50 |
362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
In today's
trading session, the NGERIA Sovereign papers traded with mixed
sentiments with a bearish bias. At the short-end of the sovereign curve, the
NGERIA 2021 and 2023 papers strengthened by +13bps and +6bps respectively,
while the rest of the curve weakened by c.4bps on the average despite gradual
gains (+1.82% day-on-day) in Brent crude oil prices.
It was a quiet
trading session for the NIGERIA Corps with little activity
noted on the tracked papers. We, however, noted selling interests on the SEPLLN
2023, which weakened by -11bps.
Related News
1. Bullish Run
Extends to Fourth Consecutive Week as Average Yield on T-Bills Drops to 12.4%
2. Invest in FGN
Monthly Bond Auction - October 2019
3. Inflation
Figures Hit A Three-Month High as Money Market Rates Drop to Single Digits
4. Money Market
Rates Hit A 3-week High, As CBN Drains Liquidity Via Wholesale FX Auction
5. DMO Lists Series
II FGN N15bn 7-Year Green Bond on NSE
6. Sustained
Bullish Run as Average Yield Falls 0.7% WoW to 12.6%
7. Money Market
Rates Close The Week Higher as Retail FX Take Out Liquidity
8. NSE, LuxSE Sign
MoU to Expand the Green Bond Markets