DMO Struggles to Raise Long Term Debt for a Second Consecutive Auction

Proshare

Wednesday, September 25, 2019 / 06.30AM / Zedcrest Capital



At the Primary Auction, the DMO raised a total of N100bn across the three tenors on offer (N50bn less than the initial amount offered). Demand was skewed towards the 10- and 30-year maturities with bid-to-cover ratios of 1.66X and 1.16X respectively. The stop rates closed higher by +9bps on the average across the three tenors offered.

 

We expect the market to trade with a slight bullish bias opening tomorrow in reaction to auction results.


Bonds

The FGN bond market remained sluggish as market participants focused more on the outcome of the bond auction. We noticed improved offers across the FGN bond curve as bids drifted wider in anticipation of a slight uptick in yields at the FGN bond auction. Flows stayed very light intraday with less than N1billion volume traded during the session.

 

 

FGN Bonds - 25 September 2019

Maturity

Stop Rate (%)

Offer (₦'bn)

Sub (₦'bn)

Sale (₦'bn) 

Apr 2023

14.39

45.00

14.33

6.83

Apr 2029

14.43

50.00

82.91

56.16

Apr 2049

14.64

55.00

63.66

37.02

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.46

13.53

0.00

16.39 27-Jan-22

14.20

13.85

0.07

12.75 27-Apr-23

14.39

14.30

0.00

14.20 14-Mar-24

14.18

13.78

(0.02)

13.53 23-Mar-25

14.30

14.10

0.00

12.50 22-Jan-26

14.29

14.07

0.00

16.29 17-Mar-27

14.27

14.05

0.00

13.98 23-Feb-28

14.39

14.20

0.06

12.15 18-Jul-34

14.57

14.35

0.03

12.40 18-Mar-36

14.58

14.23

0.02

16.2499 18-Apr-37

14.58

14.31

0.01

14.80 26-Apr-49

14.59

14.54

(0.03)


Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market remained slightly bullish as liquidity from last week's statutory disbursements lingered in the Money Market, coupled with the absence of an OMO auction. We saw demand on some selected maturities, mostly at the long end of the curve as Investors cherry-picked T-bills maturities with high yields (Above 15% effective yield)

 

We expect the CBN to float an OMO auction tomorrow to counter N422bn worth of OMO maturing T-bills which will significantly elevate system liquidity.  The volume of longer-tenured OMO T-bills sold by the CBN is expected to put more pressure on the short- and medium-end of the T-bills curve as investors continue to switch to the long end due to the attractive yields available at the moment.


 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Oct-19

12.90

12.10

0.10

14-Nov-19

12.90

12.50

0.10

5-Dec-19

12.80

11.90

0.05

2-Jan-20

12.20

12.00

(0.30)

6-Feb-20

13.00

12.55

0.10

19-Mar-20

12.50

12.20

(0.30)

2-Apr-20

12.50

12.45

(0.10)

14-May-20

13.20

12.70

0.05

04-Jun-20

13.20

12.70

(0.10)

02-Jul-20

13.30

13.20

(0.10)

13-Aug-20

13.35

13.20

0.10

3-Sep-20

13.35

13.20

0.00

Source: Zedcrest Dealing Desk

 


Money Market

Money market rates remained stable amidst little funding pressures. System liquidity is estimated to close at c.N190bn positive, as the OBB and OVN rates closed the session slightly lower at 3.71% and 4.50% respectively.

 

We expect money market rates to trend northwards closing the week due to the funding activities by Primary and Authorized Dealers for OMO T-bills sales, FGN bond and Retail FX auctions. 


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.71

3.86

Overnight (O/N)

4.50

4.57

Source: FMDQ, Zedcrest



FX Market

The Naira remained stable across almost all the traded segments, with the only change witnessed at the CBN Spot rate which strengthened by 5k to close at N306.90/$ (from N306.95/$).



FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.95

CBN SMIS

358.13

358.13

I&E FX Window

362.29

362.29

Cash Market

357.80

357.80

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

Yields on the NGERIA Sovereigns ticked higher in today's session, as news of larger than expected reported oil inventories saw global oil prices drop by 1.79% in trading. Yields closed higher by c.9bps on the average across all the papers on the sovereign curve. 


The NGERIA Corps had a quiet trading session across most tracked papers. We however noticed sustained demand interest on the FIDBAN 2022s and SEPPLN 2023s.

 

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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