Heavy Demand at the NTB Auction as Rates Dropped Significantly On 91 days and 182 days Bills

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Wednesday, July 29, 2020 / 9:33 PM / By Zedcrest Capital / Header Image Credit: Book Keeper


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FGN Bonds

The FGN Bond space closed the week on a rather sluggish note as the market seems to have dived into holiday mood from the earlier hours of the trading session. The market started slightly bearish as trading activities kicked off at the tail of the curve (34s, 35s, and 36s papers) with the 2035 maturity garnering most of the market love and its juicy offer easily matched with the available bids in the market at 9.10%. However, by mid-day, the market gradually slides into a drab tone with less aggressive bids and more offers shown from the belly to the tail of the curve. We also saw few trades settle at 9.80% levels on the 2049s paper while the average yield on the benchmark curve expanded by c.6bps D/D.

We expect to see more actions next week as more maturities roll in and local investors select few bonds offered at attractive levels.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

3.42

2.52

(0.13)

 

12.75 27-Apr-23

3.88

3.47

(0.04)

 

14.20 14-Mar-24

3.93

3.40

(0.03)

 

13.53 23-Mar-25

4.88

4.00

(0.12)

 

12.50 22-Jan-26

5.85

5.10

(0.01)

 

16.29 17-Mar-27

7.10

6.60

0.05

 

13.98 23-Feb-28

7.25

6.40

0.01

 

14.55 26-Apr-29

7.82

7.70

0.09

 

12.15 18-Jul-34

9.10

8.70

0.02

 

12.40 18-Mar-36

9.40

8.80

0.40

 

16.2499 18-Apr-37

9.40

9.05

0.20

 

14.80 26-Apr-49

10.00

9.75

0.22

 


Treasury Bills

Activities in the OMO bills space dragged for most of the trading session as the market remained poorly offered across the curve. Buyers took their stance resisting offers despite the pressure to invest due to the rising market liquidity. May and June's bills were offered at 3.50% while September- December dropped to the late 2% levels. By and large, yields compressed slightly by an average of c.2bps across the OMO curve.

The NTB space stayed very calm as attention shift to the PMA auction of today. At the Primary Market Auction, the DMO successfully issued N265.95bn, the same as the amount on offer amidst a pretty healthy demand with an average bid-to-cover of 2.04X across the three tenors on offer. Rates also dropped by an average of c.55bps, on the 91days and 182days bills while slightly increasing the 1year paper by c.5bps.

We expect activities to pick slightly in the NTB space next week, as market participants sort to fill their outstanding orders from the auction in the secondary market especially on 91days and 182days bills respectively.


 NTB - 29 Jul 2020
 

Tenor

Rate (%)

Offer (₦'bn)

Sub (₦'bn)

Sale (₦'bn)

Previous Rate (%)

Changes

89 days

1.200

49.84

94.39

49.84

1.8000

-0.0060

194 days

1.500

54.59

158.79

54.59

2.0400

-0.0054

341 days

3.400

161.52

215.09

161.52

3.3500

0.0005

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 8/13/2020

5.00

0.01

0.00

NGOMO 9/3/2020

5.50

0.01

0.00

NGOMO 10/1/2020

5.50

0.01

0.00

NGOMO 11/03/2020

5.80

0.01

(0.20)

NGOMO 12/01/2020

6.00

0.01

0.00

NGOMO 02/02/2021

6.50

1.00

0.00

NGOMOB 0 03/02/21

6.80

1.00

0.00

NGOMOB 0 03/02/21

6.80

1.00

0.00

NGOMOB 0 05/11/21

6.80

1.00

0.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

3.00

0.01

0.00

NIGTB 11/12/2020

3.00

0.01

0.00

NIGTB 01/14/2021

3.50

0.10

0.00

NIGTB 02/11/2021

3.50

0.10

0.00

NIGTB 04/29/2021

3.50

0.10

0.00

NIGTB 05/13/21

4.00

0.10

0.00

NIGTB 06/10/21

4.00

0.10

0.00

 

Money Markets

The Interbank system liquidity opened the day c.N767.20BN positive staying adequately buoyant. However, we saw a slight increase in OBB and OVN for another consecutive session although less significant for any impact with its rates closing at 1.40% and 2.10% respectively.

We expect the market to remain at these low levels as there is no significant funding need to drag the market upward especially the early part of next week.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.40

1.33

Overnight (O/N)

2.10

2.00

 

FX Market

At the Interbank FX market, the Naira/USD spot and SMIS rates remained stable to close at N381.00/$ and N380.69/$ respectively. The IEFX window on the other hand saw the slight movement as Naira depreciated against the dollar by 0.25k to close at N389.25/$. 

The cash and transfer market however remained for another consecutive session as the market slipped into holiday mood while transactions slowed significantly.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

381.00

381.00

CBN SMIS

380.69

380.69

I&E FX Window

389.25

389.50

Cash Market

473.00

473.00

Transfer Market

474.00

474.00

 

Eurobonds

The NGERIA Sovereign tickers traded on a muted note, as calm was seen through the curve. While we saw more offers for maturities around 2025s to 2031s, yields strengthened slightly in the market compared to yesterday's level compressing by an average of c.3bps across the curve.

The NGERIA Corps tickers also had a quiet session, with the only movement of the day among tracked papers was seen on ETINL 2024s and FIDBAN 2022s which compressed by 38bps and 22bps respectively.

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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