Eurobonds React to National Assembly's Approval of Additional External Borrowing Plan

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Friday, July 09, 2021 / 09:19 AM / By Zedcrest Capital / Header Image Credit: 112 International


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FGN Bonds 

The FGN Bonds market maintained its recent somber tempo in today's session, with little yield movement seen across the curve. Demand at the short-end of the curve improved today, with interests seen on the 2027s and 2028s papers causing bids to drop by 5bps on both papers. At the long end, offers continued to improve on the 2045s paper as the market priced in the supply with offers at 12.50% but still no buying interests seen from investors. The 2050s were quoted tighter in the day, starting at 13.12/00 to close at 13.07/03 but with little volumes crossed. Consequently, yields compressed by 1bps on average across the benchmark curve.

 

We maintain our expectation for bullish sentiments to persist in the market in the interim, as the market gears up for the bond maturity coming up next week.  

 

Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

11.50

10.20

0.00

14.20 14-Mar-24 

11.55

11.35

0.00

13.53 23-Mar-25 

12.20

11.45

0.00

12.50 22-Jan-26 

12.30

12.00

0.00

16.29 17-Mar-27 

12.45

12.15

(0.05)

13.98 23-Feb-28 

12.45

12.30

(0.05)

14.55 26-Apr-29 

12.50

12.10

0.00

12.15 18-Jul-34 

12.80

12.25

0.00

12.50 27-Mar-35 

13.05

12.80

0.00

12.40 18-Mar-36 

13.05

12.75

0.00

16.2499 18-Apr-37 

13.05

12.75

0.00

9.80 24-Jul-45 

13.00

12.50

0.00

14.80 26-Apr-49 

13.10

12.85

0.00

12.98 27-Mar-50 

13.20

13.00

0.00

 

 

Treasury Bills 

The Treasury bills market traded on a quiet note, with the news of an OMO auction floated by the CBN arriving just before the trading session commenced. The OMO auction however drew little attention as local banks opted instead to prepare for the CRR and FX Retail auction debit expected at the end of the week, and offshores preferred to remain Naira liquid to fund any dollar supply via CBN interventions for expatriation. Secondary market trading remained fractured, with some interest seen on the 30Jun2022 NTB paper which was quoted higher and tighter at 8.85/75.


We expect trading activities to remain tepid closing the week as banks continue to offload their OMO/NT Bills holdings in the quest to raise cash to fund their obligations expected on Friday.


Benchmark OMO Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NGOMOB 0 09/07/21 

11.00 

1.50 

0.00  

NGOMOB 0 10/19/21 

11.00 

3.00 

0.00  

NGOMOB 0 11/02/21 

12.00 

2.00 

0.00  

NGOMOB 0 12/07/21 

12.00 

2.50 

0.00  

NGOMOB 0 01/11/22 

12.50 

2.50 

0.00  

NGOMOB 0 02/01/22 

12.50 

2.50 

0.00  

NGOMOB 0 03/01/22 

12.50 

3.50 

0.00  

 

 

Benchmark NT-Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NIGTB 0 05/13/21 

8.00 

1.50 

0.00  

NIGTB 0 06/10/21 

9.00 

1.50 

0.00  

NIGTB 0 07/01/21 

10.00 

2.00 

0.00  

NIGTB 0 08/26/21 

10.00 

2.00 

0.00  

NIGTB 0 09/09/21 

10.00 

2.00 

0.00  

NIGTB 0 10/14/21 

10.00 

2.50 

0.00  

NIGTB 0 11/11/21 

11.00 

2.50 

0.00  

NIGTB 0 01/13/22 

11.00 

3.00 

0.00  

NIGTB 0 02/10/22 

11.00 

3.00 

0.00  

NIGTB 0 03/01/22 

8.00 

1.50 

0.00  

 


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Money Markets 

System liquidity took a plunge into the negative region, opening at c.N47bn negative amidst tight funding pressures. Local banks particularly dismissed the OMO auction floated by the CBN, as the funding from the CBN Repo window doubled overnight. Money market rates consequently closed the session higher, with Open Buy-Bank (OBB) and Overnight (O/N) rates rose by 125bps on average D/D to close at 11.25% and 11.75%, respectively.

 

With funding for the Retail FX auction taking center stage on the last session of the week, we expect a higher close for money market rates as the week draws to a close.

 

Money Market Rates 

  

Current (%) 

Previous (%) 

Open Buy Back (OBB) 

11.25

10.00

Overnight (O/N) 

11.75

10.50

 


FX Market  

Traded volumes in the IEFX window took a heavy dip today, closing lower by 68% at $84mio traded. The dip was mainly as the CBN scaled back the supply from its intervention sales. The Naira appreciated by N0.20k to close at N411.25/$, The bided range amongst banks remained wide between N400/$ and N420.95/$.


At the parallel market, the cash and transfer rates depreciated by 0.10% and 0.59% respectively as demand for the greenback continues to dominate the market direction.


FX Market 

 

Current (N/$) 

Previous (N/$) 

CBN SMIS 

380.69

380.69

I&E FX Window 

411.25

411.45

Cash Market 

503.50

503.00

Transfer Market 

515.00

512.00



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Eurobonds: 

The NIGERIA Sovereigns had a calm trading session, with the markets trading in the news of the Nigerian government's plan to raise $6.1bn in external borrowing being approved by its senate. The impending supply saw market participants remain risk-off the sovereign curve, with bids pulling back higher causing yields to expand by 70bps on average in a very volatile session.

 

On the other hand, the NIGERIA Corporates tickers continued to enjoy positive flows in an active session, with demand seen across most tracked papers.


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