Bonds & Fixed Income | |
Bonds & Fixed Income | |
1023 VIEWS | |
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Thursday, September 19, 2019 / 11:25 AM / By Zedcrest Capital / Header Image Credit: The Wire
Below are highlights of trading activities in
the fixed income and forex market on September 18, 2019
Bonds
The Bond market continued
its bullish run for the second consecutive trade session, as flows from bond
coupon payments continued to fuel demand. We noted sustained demand interests
for long-dated maturities, most notably the 2037s. Spreads tightened across the
curve, as bids improved across the mid- to long-end of the curve. Yields consequently closed the session lower
by c.3bps on the average across the FGN benchmark curve.
We maintain our
cautious outlook for bonds, as the current bond demand could be short-lived.
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.62 |
13.82 |
0.06 |
16.39 27-Jan-22 |
14.55 |
13.92 |
0.05 |
12.75 27-Apr-23 |
14.57 |
14.27 |
0.17 |
14.20 14-Mar-24 |
14.35 |
13.74 |
(0.01) |
13.53 23-Mar-25 |
14.34 |
14.06 |
0.01 |
12.50 22-Jan-26 |
14.26 |
14.01 |
(0.09) |
16.29 17-Mar-27 |
14.22 |
14.05 |
(0.09) |
13.98 23-Feb-28 |
14.36 |
14.05 |
(0.22) |
12.15 18-Jul-34 |
14.48 |
14.34 |
(0.15) |
12.40 18-Mar-36 |
14.52 |
14.30 |
0.02 |
16.2499 18-Apr-37 |
14.49 |
14.26 |
(0.04) |
14.80 26-Apr-49 |
14.60 |
14.43 |
(0.12) |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills
market continued traded mixed as we noted better sellers of securities at the
long of the NTbills curve as market participants offloaded positions in
anticipation of supply from the PMA. Yields Expanded by c.7bps on the average
across the NTbills benchmark curve.
At the PMA, the
DMO rolled over a total of c.N179.75bn across three tenors on offer. As expected,
stop rates foe the 91- and 182-days cleared lower than the previous auction,
whilst the 364-day closed 10bps higher bringing the auction stop rate closer to
secondary market levels.
With OMO
maturities of c.N356bn coming into the system, we expect the CBN to float an
OMO auction to manage excess liquidity. The outlook for the secondary market
remains bearish amidst tight liquidity.
NTB Auction Results - 18 Sept. 2019 |
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Tenor |
Rate (%) |
Offer (N'bn) |
Sub (N'bn) |
Sale (N'bn) |
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91-days |
11.10 |
3.00 |
4.46 |
3.00 |
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182-days |
11.75 |
8.39 |
12.36 |
8.39 |
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364-days |
13.30 |
168.36 |
359.96 |
168.36 |
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
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3-Oct-19 |
12.65 |
12.10 |
0.05 |
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14-Nov-19 |
12.65 |
11.20 |
0.00 |
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5-Dec-19 |
13.00 |
12.35 |
0.50 |
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2-Jan-20 |
13.00 |
12.50 |
0.00 |
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6-Feb-20 |
13.00 |
12.70 |
0.00 |
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19-Mar-20 |
12.30 |
12.10 |
0.00 |
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2-Apr-20 |
13.10 |
12.85 |
0.00 |
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14-May-20 |
13.25 |
12.85 |
0.15 |
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04-Jun-20 |
13.45 |
12.60 |
0.05 |
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02-Jul-20 |
13.50 |
12.50 |
0.10 |
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13-Aug-20 |
13.50 |
13.25 |
0.00 |
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Source: Zedcrest Dealing Desk
Money Market
Money Market rates closed the session lower as reduced
funding pressures allowed market participants to benchmark interbank takings to
the CBN SLF window rates. System liquidity opened at c.N41bn positive,
supported by inflows from FGN bond coupon payments. OBB and OVN rates
consequently ended the day lower at 14.57% and 15.57% respectively.
We expect money market rates to close lower in the coming
session of the back of OMO maturities expected.
Money Market Rates |
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Current (%) |
Previous (%) |
Open Buy Back (OBB) |
14.57 |
17.00 |
Overnight (O/N) |
15.57 |
18.29 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD spot and SMIS rates
remained stable to close at N306.90/$ and N358.02/$ respectively. At the
I&E window, the closing rate for the Naira depreciated by 17k to close the trading
session at N362.46/$.
The cash and transfer rates at the parallel markets saw
no change, closing at N357.50/$ and N362.50/$ respectively.
FX Market |
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Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.90 |
306.90 |
CBN SMIS |
358.02 |
358.02 |
I&E FX Window |
362.46 |
362.29 |
Cash Market |
357.60 |
357.60 |
Transfer Market |
362.50 |
362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA
Sovereigns profited from expectation of a rate cut by the US Federal
Reserve at its FOMC meeting. Yields compressed by c.3bps on the average across
the sovereign curve, following its peers in the emerging markets as global
investors hunt for yield is supported by lower rates in the US. The FOMC cut
rates by 25bps, however the voting pattern among its members showed an
unwillingness for further rate cuts this year. The FED Chair also noted that
the committee is contemplating 'faster than organic' growth of its balance sheet
over the coming months, signaling considerations for a pseudo ‘Quantitative
Easing’ package.
The NGERIA Corps
traded mixed as we noted continued demand interest for the FIDBAN 22s well
investors looked to offload the ACCESS 21s and Zenith 2022s.
Related News
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Upon Bond Auction Offer Release
2.
Invest in FGN Monthly Bond Auction - September 2019
3.
Treasury Bill Auction Schedule For September 18th, 2019
4.
Average Money Market Rate Rose Significantly By 20.04% To
Settle At 23.57% From 3.54%
5.
The Bears Take Center Stage As Average T-Bills Yield
Advances 8bps WoW To 13.4%
6.
CBN Maintains Stop Rates at OMO Auction, Tightening System
Liquidity
7.
A Quiet Trading Session as Global Oil Pressure Weigh on
Nigerian Sovereign Eurobonds
8.
CBN Maintains OMO Auction Rate for Third Consecutive Time,
Eases Market Sentiments
9.
Buoyant System Liquidity Pressures Average Yield Down To
13.3%
10. T-bills Trade Bullish to Close the Week as CBN Stalls on
OMO Auction
11.
What is Driving Early Eurobond Redemption by the Banks?