Central Bank Sterilizes N1.30Trillion Of Bank Deposits To Combat Excess System Liquidity

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Friday, April 25, 2020 / 07:03 PM / Zedcrest Capital / Header Image Credit: Virtual Data Room 


 

Below are highlights of trading activities in the fixed income and forex market on April 24, 2020 

 

 

FGN Bonds

It was a calm session to close the week in the Bonds Market, as the news IMF's recommendation of a possible $3.4Billion emergency funding loan to Nigeria dominated the focus of market participants. While demand at the short- and mid-end of the curve persisted, we noticed continued apathy for longer duration from investors with relatively low volumes crossed during the trading session. Yields consequently dropped by c.5bps on the average across the benchmark curve.

 

We expect yields to face some pressure going into the new week, as tightened system liquidity and month-end profit-taking bring improved supply to the markets.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

5.83

5.03

(0.02)

 

16.39 27-Jan-22

6.81

4.95

(0.29)

 

12.75 27-Apr-23

9.24

8.41

0.00

 

14.20 14-Mar-24

9.00

8.11

0.00

 

13.53 23-Mar-25

9.85

8.92

0.00

 

12.50 22-Jan-26

9.93

8.77

0.00

 

16.29 17-Mar-27

11.75

11.19

0.00

 

13.98 23-Feb-28

11.78

10.88

0.00

 

14.55 26-Apr-29

11.63

11.02

(0.16)

 

12.15 18-Jul-34

12.00

11.22

(0.15)

 

12.40 18-Mar-36

12.11

11.21

(0.14)

 

16.2499 18-Apr-37

12.06

11.20

0.00

 

14.80 26-Apr-49

12.60

12.40

0.00

 

 

Proshare Nigeria Pvt. Ltd.

 

Treasury Bills

The shock of the CBN's heavy CRR debit caused local banks to lose appetite for OMO bills in today's session. Bids weakened for most of the trading session as offers of the newly issued OMO bills at higher 10% levels by offshore players proved un-interesting to local banks, with very little volumes crossed. Rates inched higher by c.4bps on the average across the benchmark OMO curve.

 

We expect the markets to open the new week on a bearish note amidst squeezed system liquidity. Rates are expected to inch higher on OMO bills, possibly breaking the strong support level at 11.00%.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 5/14/2020

10.00

7.50

0.00

NGOM 6/4/2020

10.00

6.00

(0.50)

NGOM 7/2/2020

10.00

7.00

0.00

NGOM 8/13/2020

10.00

7.00

0.00

NGOM 9/3/2020

10.24

8.50

(0.01)

NGOM 10/1/2020

10.00

8.00

0.00

NGOM 11/03/2020

10.50

8.00

0.00

NGOM 12/01/2020

10.50

8.50

0.50

NGOM 01/05/2021

11.50

10.00

0.50

NGOM 02/02/2021

11.00

9.00

0.00

NGOM 03/02/21

11.00

9.00

0.00


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.26

1.75

NIGTB 1-Oct-20

4.00

0.50

0.80

NIGTB 12-Nov-20

4.00

0.50

0.50

NIGTB 14-Jan-21

4.00

0.50

0.25

NIGTB 11-Feb-21

4.00

0.50

0.10

                                                                         


Money Markets

Money Market Rates jumped by c.187bps on the average in today's session as the market reeled from a c.N1.3Trn CRR debit by the Apex Bank. System liquidity opened c.N272Bn positive but this offered no reprieve as banks' funding pressures from Bond auction debits of c.N156Bn were further compounded by their inability to access the SLF window on a Retail FX funding day. OBB and OVN rates closed the week higher at 20.33% and 20.18% respectively.

 

We expect rates remain tight opening next week as Banks remain shut from the SLF window again because of Wholesale FX funding on Monday.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

20.33

1.88

Overnight (O/N)

21.08

2.00

 

Proshare Nigeria Pvt. Ltd.

 

FX Market

The status quo remained the same at the Interbank segment, as the CBN Spot, CBN SMIS, and I&E FX window closing rates all remained unchanged.

 

At the parallel market segment, the cash and transfer rates jumped higher to close at N420.00/$ and N450.00/$ respectively as demand continues to pile up amidst very little supply.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

 361.00

 361.00

CBN SMIS

 380.69

 380.69

I&E FX Window

 383.00

 383.00

Cash Market

 420.00

 416.00

Transfer Market

 450.00

 435.00

 

Eurobonds

The NGERIA Sovereigns gave up some recent gains in today's trading, despite a slight recovery in oil prices, as offshore investors mull the prospect of the Federal Government of Nigeria taking up more debt to battle the coronavirus pandemic. Yields expanded by c.12bps  on the average across the sovereign curve.


The NGERIA Corps papers closed the week on a strong note, demand from local players saw the ACCESS 2021s (+132bps) and SEPLLN 2022s (+115bps) post gains.

 


Proshare Nigeria Pvt. Ltd.


 

 Proshare Nigeria Pvt. Ltd.

 

 

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Proshare Nigeria Pvt. Ltd.

 Proshare Nigeria Pvt. Ltd.

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