Demand For Bonds Continues For Another Consecutive Session

Proshare

Wednesday, June 24, 2020 / 7:30 AM / By Zedcrest Capital / Header Image Credit: Freepik


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The early hours of today's trading session started off with the rush for bonds across the benchmark curve as the market anticipated further surge in rates compared to yesterday closing. The 2049s traded around 11.30% levels at the market open while 2035s and 2050s were offered at 10.35% and 11.25% respectively. However, we saw yields retraced slightly, as actions from profit takers caused the bulls to pause in hopes that yields would increase further. By the session's close, the 2035s and 2050s papers had retraced by approximately 10bps and 15bps, while yields compressed by an average of c.19bps D/D across the benchmark curve.

We expect more activities from profit takers during tomorrow's trading session to be met with continued demand from local investors.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

4.90

2.87

(0.43)

 

16.39 27-Jan-22

5.10

2.21

(0.61)

 

12.75 27-Apr-23

7.38

5.95

(0.19)

 

14.20 14-Mar-24

7.33

6.25

(0.28)

 

13.53 23-Mar-25

7.65

6.99

(0.23)

 

12.50 22-Jan-26

9.01

7.78

(0.11)

 

16.29 17-Mar-27

9.78

9.36

(0.09)

 

13.98 23-Feb-28

9.90

8.50

0.01

 

14.55 26-Apr-29

9.89

8.50

0.00

 

12.15 18-Jul-34

10.69

10.25

(0.13)

 

12.40 18-Mar-36

10.67

10.32

(0.12)

 

16.2499 18-Apr-37

10.68

10.40

(0.10)

 

14.80 26-Apr-49

11.65

11.35

(0.19)

 

  

Treasury Bills

Activity in the T-bills market continued to drag, with few interests seen as offers improved across a lot of the papers. The market printed a few trades on 05Jan2021 bills at 5.70%, as it was better offered than its pairs with other January papers were offered around 5.60%. By the close of business, we saw yields expand by another c.20bps D/D.

We saw few retail interests for long-dated NTB bills (April-June maturities) although no trades printed as the bid/offer were wide apart at 3.30%/2.75%.  

Market momentum is expected to remain sluggish with no buoyant liquidity to support demand for the bills supplied.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 7/2/2020

5.00

1.20

0.00

NGOMO 8/13/2020

3.50

1.20

(1.50)

NGOMO 9/3/2020

5.00

1.20

0.00

NGOMO 10/1/2020

5.50

1.20

0.50

NGOMO 11/03/2020

5.60

1.20

0.00

NGOMO 12/01/2020

6.00

4.00

0.40

NGOMO 01/05/2021

6.50

4.00

0.50

NGOMO 02/02/2021

6.50

1.20

1.00

NGOMO 03/02/21

6.50

4.80

0.90

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

3.00

0.10

0.00

NIGTB 1-Oct-20

3.00

0.10

(1.00)

NIGTB 12-Nov-20

4.00

0.10

0.00

NIGTB 14-Jan-21

4.00

1.00

(1.00)

NIGTB 11-Feb-21

4.00

0.10

(1.00)

 

Money Markets

As expected, Interbank rates remained at the double-digit levels while we saw lots of banks camped in the SLF window. Thus, OBB and OVN rates inched higher to close the day at 14.67% and 15.67% respectively.

As system Liquidity is expected to close the day at c.42.44BN, we expect interbank rates to remain at the double-digit range during tomorrow's session since the market does not envisage any significant inflow.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.67

14.50

Overnight (O/N)

15.67

15.75



FX Market

The liquidity squeeze persevered in the interbank I&EFX market although we saw more trade volume (c.$90.09M) pass through the market today with rate depreciating slightly by 0.63k. The few trades consummated were mainly client induced, although most banks remained bided between N385 and N389 to the dollar. Other FX market segments remained unchanged with little or no activity passing through these windows to significantly affect rates.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

`I&E FX Window

386.00

386.63

Cash Market

455.00

455.00

Transfer Market

457.00

457.00

 

Eurobonds

The NGERIA Sovereign tickers strengthened in today's session, gleaning off some of the positivity in Emerging Market papers as China agrees to a 3-year debt moratorium for Angola. We saw improved bids across the benchmark papers, with some supporting trades on the mid- to long-dated papers. Yields compressed by an average of c.4bps on the sovereign curve.

Nigeria will not request a delay in debt-service payments and have also shelved any plans to issue Eurobonds this year due to deteriorated market conditions, the Hon. Minister of Finance and Director General of the Debt Management Office stated today during a call with investors. We expect this news to positively impact the NGERIA Sovereign in tomorrow's session. 

Activity in the NGERIA Corps tickers slowed today, as supply remained very weak to support market appetite. UBA 2022s and ZENITH 2022s strengthened slightly by c.3bps and c.7bps respectively.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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3.      Anchoria Fixed Income Monitor: An Activities Filled Week With T-Bills, OMO and Bond Auction

4.      The Bulls Re-emerge as Average Yield Dips 1.2% WoW

5.      Fixed Income Markets Close The Week Strong As Bulls Continue to Swipe Up Available Bonds

6.      Some Room for Manoeuvre for the DMO

7.      Secondary Market Bond Yields Drop Aggressively Following Auction Rate Cuts

8.     Summary of FGN Bond Auction Results For June 2020

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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