Eurobonds: Call it Africa Day, as Egypt and Ivory Coast Both Raise New Issues

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Tuesday, February 09, 2021 / 10:07 AM / by Zedcrest Capital / Header Image Credit: Live Trading News

 

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FGN Bonds

Yields on the FGN Bonds have continued to compress from recent highs, as we saw a lot of short-covering trades from market participants. Demand remains at the head (2023s and 2024s) and belly (2028s and 2029s) of the curve, with the latter crossing hands at 9.95% levels. At the tail of the curve, the quotes tightened further as we saw some trades cross at 10.60% levels for the 2034s and 2049s. By and large a positive session, yields compressed by c.24bps on the average across the benchmark curve at the trading's close.

 

We remain sceptical for taking duration at these levels as we believe the effect of the CBN's action on raising short-term rates is yet to be fully priced in. Further rate hikes by the DMO and CBN as the coming NTB and OMO auctions could consolidate these levels and thus put pressure on bond yields to go higher to compensate for longer duration.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

10.00

6.00

0.35

14.20 14-Mar-24

10.00

6.49

0.03

13.53 23-Mar-25

10.00

6.50

0.10

12.50 22-Jan-26

10.01

7.36

(0.01)

16.29 17-Mar-27

10.51

9.00

0.00

13.98 23-Feb-28

10.50

9.70

0.00

14.55 26-Apr-29

10.53

9.90

(0.11)

12.15 18-Jul-34

10.73

10.35

(0.40)

12.50 27-Mar-35

10.82

10.37

(0.26)

12.40 18-Mar-36

10.77

10.35

(0.38)

16.2499 18-Apr-37

10.85

10.40

(0.81)

9.80 24-Jul-45

10.98

10.35

(0.83)

14.80 26-Apr-49

11.00

10.47

(0.64)

12.98 27-Mar-50

11.00

10.49

(0.43)

 

Treasury Bills

The OMO market had another relatively quiet session, as participants continued to weigh double-digit funding costs from the interbank money market against taking up single-digit rates available on OMO bills. The long-dated bills (January - February 2022) were quoted within a wide band, with bids around 9.30% but offers fixed at 8.00% making it hard to cross trades.

 

We continued to see offers of NTB bills, especially mid- to long-dated papers at 1.20% as market participants position with the expectation of higher rates at the coming NTB auction later in the week.

 

We expect the market to remain choppy as participants wait to see the DMO's move at the coming auction following last week's OMO auction by the CBN.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 03/02/21

6.00

0.03

0.00

NGOMOB 0 05/11/21

6.50

0.03

0.00

NGOMOB 0 06/08/21

6.50

0.04

0.00

NGOMOB 0 08/10/21

6.50

0.04

0.00

NGOMOB 0 09/07/21

7.00

0.04

0.00

NGOMOB 0 10/19/21

8.00

0.05

0.00

NGOMOB 0 11/02/21

8.00

0.05

0.00

NGOMOB 0 12/07/21

8.00

0.05

0.00

NGOMOB 0 01/13//22

8.00

0.05

0.00

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 02/11/21

6.00

0.03

0.00

NIGTB 0 03/11/21

6.00

0.03

0.00

NIGTB 0 04/29/21

6.00

0.03

0.00

NIGTB 0 05/13/21

6.50

0.03

0.00

NIGTB 0 06/10/21

6.50

0.04

0.00

NIGTB 0 07/01/21

6.50

0.04

0.00

NIGTB 0 08/26/21

6.75

0.04

0.00

NIGTB 0 09/09/21

6.75

0.04

0.00

NIGTB 0 10/14/21

8.00

0.05

0.00

NIGTB  0 11/11/21

7.00

0.05

0.00

NIGTB  0 01/11/22

8.00

0.05

0.00

NIGTB 0 02/11/21

6.00

0.03

0.00

NIGTB 0 03/11/21

6.00

0.03

0.00

 


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Money Markets

The interbank system liquidity remained relatively tight, opening at N186billion positive on the day. OBB and OVN rates closed lowered by 363bps on the average as local banks access the cheaper option of the CBN lending window (at 12.50%) in the wake of no auction funding pressures.

 

We expect the interbank rates to ease slightly as banks with excess liquidity battle for rates against the fixed CBN lending rates.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.00

17.50

Overnight (O/N)

14.25

18.00

 


FX Market

The FX market continued its theme so far this month, with relatively improved activity seen in the I&E FX window. The closing rate closed N2.33k weaker (N398.50/$) following a 40% drop in traded volumes D/D. The trading band tightened slightly as deals were closed between the low and high of N385/$ and N402.00/$ respectively.

 

The Naira also weakened against the greenback at the parallel market, as the cash rate continued its slow-but-steady decline to close at N477.00/$. The transfer rate remains stable, unchanged at $489.00 where it has traded so far this month.


FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

398.50

396.17

Cash Market

477.00

476.50

Transfer Market

489.00

489.00

 

 

Eurobonds

It was a very active session as the NIGERIA Sovereigns continued to post gains as global oil passed the $60pb mark. Demand remained steady mostly at the short end of the curve, with some participants looking to switch into shorter duration by selling longer-dated papers to buy shorter tenors. Yields across the sovereign curve dropped by c.11bps on the average.


In the SSA space, we had a relatively quiet session as the market's focus was mainly on the new issues by some African countries. Egypt took advantage of the recent rally in African Sovereign notes, raising $3.75 billion of bonds in 5-, 10- and 40-year notes with respective yields of 3.875%, 5.875% and 7.5%. The Ivory Coast took a step closer to raising $850 million of new funding via re-issuance of its 11- and 27-year notes, which were priced between 4.30% - 4.45% and 5.75% - 5.90% respectively.

 

The NIGERIA Corps tickers had a relatively quiet trading session as the Ecobank Nigeria Limited pushed forward with its plan to raise $300million via its new Eurobond issue.  The ACCESS 2021s and SEPPLN 2023s posted some losses as some investors sold off current holdings to prepare for the new issue, expanding by c.25bps and c.53bps respectively. On the hand, UBANL 2022s and ETINL 2024s saw some positive flows, with yields on those papers gaining by c. 23bps and c.3bps respectively.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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