Demand for OMO Bills Dropped Rate Especially For Shorter-Dated Bills

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Wednesday, August 19, 2020 / 8:52 AM / By Zedcrest Capital / Header Image Credit: Business AM Live


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FGN Bonds

The FGN bonds space opened the day on a very hushed tone with slight movement seen in yields across the curve. Few of the market actions were at the belly of the curve 2026s and 2027s bond with trades settling around 6.45% and 7.70% on both bonds respectively. Most of the other benchmark papers were largely quoted for most of the trading session albeit few trades consummated on these papers. Subsequently, the average yield expanded slightly by c.2bps compared D/D.

We expect little activity in tomorrow's session, as attention shifts to the bond auction scheduled to hold.

 

FGN Bonds  Expectation - August 2020

Tenor

Offer (N'bn)

Expected Stop Rate (%)

Previous Stop Rate (%)

Jan-26

25.00

5.80-6.05

6.00

Mar-35

40.00

9.10-9.40

9.50

Jul-45

45.00

9.50-9.70

9.80

Mar-50

40.00

9.80-9.95

9.95

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

5.86

2.76

(0.20)

 

12.75 27-Apr-23

5.99

4.36

(0.01)

 

14.20 14-Mar-24

5.99

4.40

(0.06)

 

13.53 23-Mar-25

6.17

4.71

(0.01)

 

12.50 22-Jan-26

6.79

5.94

(0.10)

 

16.29 17-Mar-27

7.96

7.34

0.00

 

13.98 23-Feb-28

8.04

7.24

0.00

 

14.55 26-Apr-29

8.85

8.21

0.40

 

12.15 18-Jul-34

9.75

9.30

(0.01)

 

12.40 18-Mar-36

10.08

9.43

0.00

 

16.2499 18-Apr-37

10.20

9.36

0.00

 

14.80 26-Apr-49

10.16

9.78

0.12

 

 

Treasury Bills

The OMO bills space traded on a bullish note as the Tuesday OMO bill maturities hit the system and the non-issuance of an auction by the CBN to take out these maturities triggers buying. Interest for OMO bills was seen across the curve although the bulk of the transactions were focused on the shorter-dated bills. September- December bills were easily matched off as most of the offers met the bids around 3.50% levels at the early hours of trading but later dropped by c.30bps as the flurry of bids continued to target bills with maturities within that period. May/June was left out of this party with most of its trades settling around 4% levels.

The NTB bills space on the other hand stayed quiet for most of the trading session witnessing small retail volumes at the end of the curve (July bill) which was offered at 2.90% levels.

We expect market demand to persist tomorrow especially for shorter-dated bills albeit less aggressive compared to today's trading session.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 9/3/2020

4.50

0.01

(0.50)

NGOMO 10/1/2020

4.00

0.01

(1.00)

NGOMO 11/03/2020

4.00

0.01

(1.00)

NGOMO 12/01/2020

5.00

0.01

0.00

NGOMO 02/02/2021

5.50

0.01

(1.50)

NGOMOB 0 03/02/21

6.00

0.01

(1.00)

NGOMOB 0 05/11/21

6.00

0.01

(1.00)

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

2.50

0.01

0.00

NIGTB 11/12/2020

3.00

0.01

(2.00)

NIGTB 01/14/2021

3.00

0.01

(2.00)

NIGTB 02/11/2021

3.50

0.01

(1.50)

NIGTB 04/29/2021

3.50

0.01

(1.50)

NIGTB 05/13/21

4.00

0.01

(1.00)

NIGTB 06/10/21

4.00

0.01

(1.00)

 

Money Markets

The interbank system liquidity remained very low opening the day at c.N61.09BN positive although we saw a slight drop in OBB and OVN rates albeit less significant with its rates closing at 15.25% and 16.00% respectively.
We expect rates to drop slightly during tomorrow's session although may remain around the double-digit corridor despite the low funding pressure in the interbank market.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.25

16.40

Overnight (O/N)

16.00

17.50

 

FX Market

The FX market stayed very quiet for the most part of the trading session with rates staying unchanged across the different market segments except at the IEFX market where the Naira appreciated slightly by 0.20k closing the day at N389.98/$ albeit banks are still largely bided in that space.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

381.00

381.00

CBN SMIS

380.69

380.69

I&E FX Window

385.98

385.78

Cash Market

475.00

473.00

Transfer Market

476.00

475.00

 

Eurobonds

The NIGERIA Sovereigns Eurobond curve traded on a discreet note although activities remained relatively bullish. Activities slowed significantly while bids opened less aggressive compared to yesterday's closing consequently causing yields to expanded slightly by an average of c.2bps across the sovereign curve.

The NIGERIA Corporates traded on a quiet session also as the only movement seen was on FIDBAN 2022s and ETINL 2024s compressing by +c.43bps and +c.80bps respectively.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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