DMO Sells N330bn Worth of FGN Bonds on the Back of a Strong FGN Bond Auction Demand

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Thursday, June 24, 2021 / 10':30 AM / By Zedcrest Capital / Header Image Credit: Business Post Nigeria


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FGN Bonds 

The FGN bonds market held its breath in today's session with yields across the benchmark curve remaining mostly unchanged from the previous day levels as traders anticipated the outcome of the FGN Bond primary market auction. Consequently, yields compressed by an average of c.1bps across the benchmark curve.


At the bond auction, the DMO shocked the market by overselling bonds by over 2.2x of the amount offered, raising a total of c.333.56bn cash across the three tenors. As expected, the auction was well-bided by market participants which steered the DMO's appetite to raise adequate cash at a cheaper level.  The stop rates closed at 12.74%, 13.50%, and 13.70% for the 2027s, 2035s, and 2050s papers floated at the auction, shedding approximately c.43bps from the previous auction stop rate.


For tomorrow, we expect activities to pick sightly in the secondary market as bargain hunters take advantage of the large auction sale to cherry-pick bonds offered at attractive levels.


FGN Bonds Auction Result - June. 23, 2021

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn) 

Previous Rate (%)

Change

Mar-27s

12.74

50.00

66.21

54.31

13.10

-0.3600

Mar-35s

13.50

50.00

127.45

104.90

14.00

-0.5000

Mar-50s

13.70

50.00

223.82

171.09

0.00

0.0000

 

Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

11.98

11.31

0.00

14.20 14-Mar-24 

12.16

11.44

0.00

13.53 23-Mar-25 

12.49

11.37

0.00

12.50 22-Jan-26 

12.30

11.54

0.00

16.29 17-Mar-27 

13.00

12.55

0.01

13.98 23-Feb-28 

12.68

12.35

(0.02)

14.55 26-Apr-29 

12.67

12.35

(0.02)

12.15 18-Jul-34 

13.25

12.95

(0.04)

12.50 27-Mar-35 

13.51

13.10

(0.01)

12.40 18-Mar-36 

13.30

12.93

(0.03)

16.2499 18-Apr-37 

13.20

12.95

0.00

9.80 24-Jul-45 

13.40

13.06

0.00

14.80 26-Apr-49 

13.55

13.39

0.00

12.98 27-Mar-50 

13.56

13.26

0.00

 


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Treasury Bills 

It was another consecutive session with muted trading activity in treasury bills space, as the cash crunch in the Money Market continues to burden banks' position. Yields remained steady across the treasury bills curve with little or no demand to match the few offers available during the trading session. The special bills were also offered above the 9.00% band with few trades crossed at 9.20% towards the close of business. 


We expect trading activities to remain tepid in the treasury bills space as banks continue to offload their OMO/NT Bills holdings in the quest to raise cash to fund their obligations.


Benchmark OMO Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NGOMOB 0 09/07/21 

11.00 

1.50 

0.00  

NGOMOB 0 10/19/21 

11.00 

3.00 

0.00  

NGOMOB 0 11/02/21 

12.00 

2.00 

0.00  

NGOMOB 0 12/07/21 

12.00 

2.50 

0.00  

NGOMOB 0 01/11/22 

12.50 

2.50 

0.00  

NGOMOB 0 02/01/22 

12.50 

2.50 

0.00  

NGOMOB 0 03/01/22 

12.50 

3.50 

0.00  

 

 

 

 

Benchmark NT-Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NIGTB 0 05/13/21 

8.00 

1.50 

0.00  

NIGTB 0 06/10/21 

9.00 

1.50 

0.00  

NIGTB 0 07/01/21 

10.00 

2.00 

0.00  

NIGTB 0 08/26/21 

10.00 

2.00 

0.00  

NIGTB 0 09/09/21 

10.00 

2.00 

0.00  

NIGTB 0 10/14/21 

10.00 

2.50 

0.00  

NIGTB 0 11/11/21 

11.00 

2.50 

0.00  

NIGTB 0 01/13/22 

11.00 

3.00 

0.00  

NIGTB 0 02/10/22 

11.00 

3.00 

0.00  

NIGTB 0 03/01/22 

8.00 

1.50 

0.00  

 


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Money Markets 

Interest rates trended up by an additional 150bps from yesterday's closing as naira dealers scrambled to cover their positions amidst tight system liquidity with the market opening in the negative territory of -c80.27Bn. Local banks camped at the CBN Lending and Repo windows to fund their daily operations, forcing OBB and Overnight rates to close 20.00% and 21.00%, respectively.


For Tomorrow, we expect interbank rates to coast around this level with most banks remaining at the SLF window as the current cash crunch is expected to linger in the interim.


Money Market Rates 

  

Current (%) 

Previous (%) 

Open Buy Back (OBB) 

20.00

18.75

Overnight (O/N) 

21.00

19.25

 


FX Market  

The FX space opened the day on a sluggish as traders continued to scramble for funds amidst the poorly supplied FX market.  Traded volumes increased slightly by 13% from the previous day's close while the Naira depreciating by N1.50k to close at N411.83/$, The bided range amongst banks remained wide between N400/$ and N430/$.


At the parallel market, the cash and transfer market remained unchanged for another consecutive session.


FX Market 

 

Current (N/$) 

Previous (N/$) 

CBN SMIS 

380.69

380.69

I&E FX Window 

411.50

410.00

Cash Market 

496.00

496.00

Transfer Market 

513.00

513.00

 


Eurobonds: 

Risk cleared in the sub-Saharan Eurobond markets today in reaction to the dovish US fed comments. The ANGOLAs GHANAs and IVYCSTs bonds were the most traded today as prices strengthened by an average of +58cents. The Nigerian sovereigns were not excluded in these price gains albeit it was at a slower pace when compared to the other SSA sovereigns.

 

The NIGERIA Corps tickers continued to trade on a bullish note, especially on the ETINL 31s paper, which remained the most sought-after bond for investors across the tracked tickers. Price on the ETINL 31s strengthened further by additional 25cents to close at 101.75 on the offer D/D.

 


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