CBN Sells 364-Day OMO T-Bills On A 46.00% Pro-rata Basis, Cuts Rates By 2bps

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Friday, September 27, 2019 / 07:00AM / Zedcrest Capital / Header Image Credit: blog.martopolis.com



The CBN offered to sell an aggregate amount of N250bn worth of OMO T-bills across 3 tenors (84day, 184day and 364day). As usual, demand on the 84days and 184days remained weak as most investors queued at the long-end of the OMO T-bills curve.  CBN eventually sold a total amount of N302.42Bn with the bulk of the sales done on the 364days (N300bn). The highlight of the auction was CBN's 46.00% pro-rata allotment of the 364day T-bills with stop rates closing 2bps lower than the previous OMO auction.

We expect the market to trade on a firmly bullish note tomorrow with most demand skewed towards the long end of the T-bills curve as investors seek to fill their lost/prorated bids from the OMO auction. The ample liquidity in the Money Market is also expected to spur fair demand in the T-bills market.


Bonds

The FGN bond market opened the day on a very calm note as traders tidied up their books for the end of Q3 2019. We, however, saw some bargain hunting for the on-the-run 10- and 30-years bonds from some local investors looking to fill some of their lost bids at yesterday's bond auction. Consequently, yields closed relatively flat DoD with the 30-year bond repricing upwards by 6bps to reflect the previous day's auction results.

 

We expect the market to maintain a slight bullish tilt as the bargain hunt for attractive yields on FGN bonds is likely to continue in the short to medium term.


 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.33

13.49

(0.13)

16.39 27-Jan-22

14.20

13.77

0.00

12.75 27-Apr-23

14.36

14.32

(0.03)

14.20 14-Mar-24

14.19

13.66

0.01

13.53 23-Mar-25

14.24

14.06

(0.06)

12.50 22-Jan-26

14.29

14.11

0.00

16.29 17-Mar-27

14.26

14.03

(0.01)

13.98 23-Feb-28

14.39

14.13

0.00

12.15 18-Jul-34

14.57

14.37

0.00

12.40 18-Mar-36

14.58

14.27

0.00

16.2499 18-Apr-37

14.58

14.33

0.00

14.80 26-Apr-49

14.65

14.60

0.06


Source: Zedcrest Dealing Desk

 


Treasury Bills

The T-bills market traded on a mixed note today, with demand seen at the long-end of the curve, while the short- and medium-end of the curve remained pressured due to the floatation of an OMO T-bills auction by the CBN.

 

The CBN offered to sell an aggregate amount of N250bn worth of OMO T-bills across 3 tenors (84day, 184day and 364day). As usual, demand on the 84days and 184days remained weak as most investors queued at the long-end of the OMO T-bills curve.  CBN eventually sold a total amount of N302.42Bn with the bulk of the sales done on the 364days (N300bn). The highlight of the auction was CBN's 46.00% pro-rata allotment of the 364day T-bills with stop rates closing 2bps lower than the previous OMO auction.

 

We expect the market to trade on a firmly bullish note tomorrow with most demand skewed towards the long end of the T-bills curve as investors seek to fill their lost/prorated bids from the OMO auction. The ample liquidity in the Money Market is also expected to spur fair demand in the T-bills market. 



OMO  - 26 September 2019

Tenor

Stop Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

84days

11.59

20.00

0.30

0.30

184days

11.79

30.00

2.12

2.12

364days

13.48

200.00

678.25

300.00

 


Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Oct-19

12.75

12.10

(0.15)

14-Nov-19

13.00

12.50

0.10

5-Dec-19

12.90

12.00

0.10

2-Jan-20

12.20

12.05

0.00

6-Feb-20

13.10

12.45

0.10

19-Mar-20

12.90

12.40

0.40

2-Apr-20

12.50

12.45

0.00

14-May-20

13.20

12.70

0.00

04-Jun-20

13.30

12.70

0.10

02-Jul-20

13.15

13.05

(0.15)

13-Aug-20

13.40

13.20

0.05

3-Sep-20

13.35

13.05

0.00

Source: Zedcrest Dealing Desk

 


Money Market

Money market rates increased DoD by about 3.00% but remained depressed at single digits, with the OBB and OVN closing at c.6.43% and c.7.43% respectively. System liquidity is estimated to close at c.N400bn positive, due to the positive cash inflows from OMO T-bills net cash position i.e. (OMO T-bills Maturity vs Sales) of about N120bn, and c.100bn in retail FX refunds.

 

We expect money market rates to trend significantly higher tomorrow as Authorized Dealers fund for FGN bond and Retail FX auctions debits.

 


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

6.43

3.71

Overnight (O/N)

7.43

4.50

Source: FMDQ, Zedcrest



FX Market

At the interbank, the Naira/USD spot rate lost 5k to close at N306.95/$ while the SMIS rates remained stable at N358.13/$. At the I&E window, the closing rate for the Naira depreciated by 29k to close the trading session at N362.58/$.

The cash and transfer rates at the parallel markets saw no change, closing at N357.80/$ 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

362.58

362.29

Cash Market

357.80

357.80

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns reversed losses in today's trade session, as oil prices strengthened by +40pct. We noted some demand interest from offshore and local clients across all the tracked papers, notably the 2038s and 2047s maturities. Yields closed lower by c.9bps on the average across all the papers on the sovereign curve.

 

The NGERIA Corps didn't have such a positive session, as we noted sellers of the ZENITH 2022s, SEPPLN 2023s and ETINL 2024s which lost -14bps, -33bps and -4bps respectively.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
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