DMO Steadies Rates for NTBs at PMA Today as Demand for Fixed Income Papers Continues Unabated

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Thursday, September 17, 2020 / 7:43 AM / By Zedcrest Capital / Header Image Credit: Nigerian Finder


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FGN Bonds

As expected, the FGN Bonds market resumed trading on a bullish note as investors continued to lock up incoming funds in papers mostly at the belly of the bond curve. Demand was evident on the 2024s - 2029s papers, as yields dropped by c.20bps on the average across that segment of the curve. At the tail of the curve, 2034s - 2036s papers continued to trade at 9.60% levels, while bids improved on the 2049s and 2050s below 10.00% but with scarce supply to match. Consequently, yields compressed by c.10bps on the average across the benchmark bond curve.

Demand is expected to pick up as we close out the week, as FGN Bond coupon payments of c.N91BN enter the system over the next two days. We expect the spreads in the market to tighten, especially at the long-end of the curve in the coming sessions.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

5.00

3.45

0.00

 

12.75 27-Apr-23

5.65

3.80

0.00

 

14.20 14-Mar-24

5.25

3.85

(0.40)

 

13.53 23-Mar-25

5.55

4.75

(0.25)

 

12.50 22-Jan-26

6.60

6.30

(0.20)

 

16.29 17-Mar-27

7.70

7.40

(0.05)

 

13.98 23-Feb-28

7.80

7.65

0.00

 

14.55 26-Apr-29

8.30

8.00

(0.25)

 

12.15 18-Jul-34

9.85

9.60

0.00

 

12.40 18-Mar-36

9.90

9.65

0.00

 

16.2499 18-Apr-37

9.90

9.70

0.00

 

14.80 26-Apr-49

10.00

9.90

(0.02)

 

 

Treasury Bills

The OMO bills market had a quiet session today, as demand for bills by local banks outweighed supply from offshore investors again as the focus for most of the session was on the bi-weekly Primary Market Auction (PMA) floated by the Debt Management Office today. The most active papers today were the August maturities, as bids broke the resistance point to trade just below 3.00%.

At the PMA, the DMO rolled over a total of N158.75BN while keeping stop rates relatively across the 3 tenors on offer. The stop rates on the 91- and 182-day papers were cut by 1bps and 5bps respectively to close at 1.09% and 1.50% respectively, while the 364-day rate remained unchanged at 3.05%. Demand at the auction was related muted, with the bid-to-cover ratio of c.1.29X only recorded.

With the supply from today's NTB auction, coupled with an expected OMO auction tomorrow we expect rates to remain stable at current levels as local banks slow down on the aggressive demand.


 

Primary Market Auction Results

 NTB  - 16 Sept. 2020

Tenor

Rate (%)

Offer (₦'bn)

Sub (₦'bn)

Sale (₦'bn)

Previous Rate (%)

Changes

91 days

1.090

2.00

3.99

2.00

1.100

-0.0100

182 days

1.500

8.39

15.47

8.39

1.550

-0.0500

364 days

3.050

148.36

184.71

148.36

3.050

0.0000

 

Benchmark OMO Bills

 

Description

Bid (%)

Offer (%)

Day Change (%)

 

NGOMO 10/1/2020

2.50

0.01

0.00

 

NGOMO 11/03/2020

3.00

0.01

0.00

 

NGOMO 12/01/2020

3.00

0.01

0.00

 

NGOMO 01/05/2021

3.00

0.01

0.00

 

NGOMO 02/02/2021

3.00

0.01

0.00

 

NGOMO 03/02/21

3.50

0.01

0.00

 

NGOMO 05/11/21

3.50

0.01

0.00

 

NGOMO 06/08/21

4.00

0.01

0.00

 

NGOMO 08/10/21

4.00

0.01

0.00

 

 

Benchmark NTBills

 

Description

Bid (%)

Offer (%)

Day Change (%)

 

NIGTB 10/1/2020

2.50

0.01

0.00

 

NIGTB 11/12/2020

2.50

0.01

0.00

 

NIGTB 12/31/2020

2.50

0.01

0.00

 

NIGTB 01/14/2021

3.00

0.01

0.00

 

NIGTB 02/11/2021

3.00

0.01

0.00

 

NIGTB 04/29/2021

3.00

0.01

0.00

 

NIGTB 05/13/21

3.50

0.01

0.00

 

NIGTB 06/10/21

4.00

0.01

0.00

 

NIGTB 07/01/21

4.00

0.01

0.00

 

NIGTB 08/26/21

4.00

0.01

0.00

 

 

Money Markets

System liquidity opened today at c.N195bn positive, as money market rates dropped by an average of c.105bps with little to no funding pressure on banks. Consequently, OBB and OVN rates closed the session at 3.50% and 4.00% respectively.

We expect the interbank rates to remain low as OMO maturities of c.N350BN flow into the system tomorrow.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.50

4.40

Overnight (O/N)

4.00

5.20


FX Market

The USD cash market closed weaker compared to yesterday as supply continues to dwindle amid persistent demand pressures. The Cash and Transfer rates both lost N5.00 respectively to close at N465.00/$ and N470.00/$ respectively. Rates at the official windows remained unchanged for another consecutive trading session.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

386.00

386.00

Cash Market

465.00

460.00

Transfer Market

470.00

465.00

 

Eurobonds

The NIGERIA Sovereigns continued its rally alongside the rallying prices of global oil prices. Bids improved across all the papers on the sovereign curve, as yields compressed by a further c.3bps consolidating the previous day's gains.

With oil prices still expected to go higher off the back of supply disruptions and larger-than-expected drawdowns from oil inventories, we expected an extended wash of positive sentiments for NIGERIA and its fellow oil-related sovereign papers in the interim.

 

Proshare Nigeria Pvt. Ltd.




Proshare Nigeria Pvt. Ltd.



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