Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide

Proshare

Tuesday, July 28, 2020 / 8:59 PM / By Zedcrest Capital / Header Image Credit: Financial Intelligence


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The FGN bond space started on a quite interesting note as actions from profit-takers gingered slight action especially at the tail of the curve. The day kicked off with better offers for the 2035 and 2050s papers which were matched with available bids in the market. The 2035s opened the day with it trades settling around 8.90% and then gradually increasing to 8.95% levels. By mid-day, we saw trading activities slowed, with more offers shown, and bids becoming less aggressive, making it difficult to close trades while quotes stayed stuck at 9.05%/8.95%.

The 2049s and 2050s weren't left out in the market actions today with most of its trades settling around 9.70% levels. Subsequently, yield compressed by an average of c.6bps D/D across the benchmark curve.

We expect the market trades to continue in these tides with more actions from profit-takers especially at the tail of the curve.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

3.55

2.63

(0.17)

 

12.75 27-Apr-23

3.92

3.49

(0.09)

 

14.20 14-Mar-24

3.96

3.41

(0.07)

 

13.53 23-Mar-25

5.00

4.40

0.00

 

12.50 22-Jan-26

5.86

5.10

(0.05)

 

16.29 17-Mar-27

7.05

6.58

(0.04)

 

13.98 23-Feb-28

7.24

6.70

(0.04)

 

14.55 26-Apr-29

7.73

7.39

(0.22)

 

12.15 18-Jul-34

9.08

8.45

0.11

 

12.40 18-Mar-36

9.00

8.63

(0.03)

 

16.2499 18-Apr-37

9.20

9.00

0.00

 

14.80 26-Apr-49

9.78

9.66

(0.07)

 


 

Treasury Bills

The OMO bills space continued in its slow tides largely bided with poor offers making it difficult to seal trades. Most of the market bids were for March- June bills with no offer to show for trade. The few offers seen were for December and January bills albeit better than yesterday's levels but still far from the bull's expectations who were resisting picking these bills at the mid of 3% level. Consequently, yields dropped further by an average of c.14bps D/D.

The NTB space saw a bit of action in retail sizes at the belly of the curve which settled around 1.90%, however, yields stayed flattish across the NTB curve.

For tomorrow, we expect the OMO space to coast around these levels except the APEX intervene with a possible OMO auction to ease the market. While at the NTB space, we expected a bit of calmness as attention shifts to the PMA auction and its possible outcomes.

 

Primary Market Auction Expectation

NTB - 29 Jul 2020

 

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

49.84

1.50-1.80

1.8000

182 days

54.59

1.80-2.00

2.0400

364 days

161.52

3.05-3.35

3.3500

 

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

(0.50)

NGOMO 11/03/2020

6.00

0.01

0.00

NGOMO 12/01/2020

6.00

0.01

(0.50)

NGOMO 02/02/2021

6.50

1.00

(0.30)

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 stayed adequately buoyant opening the day at c.N746.01BN although we saw a slight uptick in OBB and OVN rates albeit less significant with its rates closing at 1.33% and 2.00% respectively.

With no significant funding need tomorrow, we expect rates to hover around this level during tomorrow's trading session.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.33

1.13

Overnight (O/N)

2.00

1.88

 

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 0.25k closing the day at N389.50/$ 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

389.50

389.25

Cash Market

473.00

473.00

Transfer Market

474.00

474.00

 

Eurobonds

The NGERIA Sovereign tickers traded on a discreet note, although largely bullish across the curve with the market gaining most of its action on the 2025 paper. We also saw slight interest for few longer-dated papers although in small sizes as such yields compressed by an average of c.7bps across the sovereign curve. 

The NGERIA Corps tickers traded on a quiet session also as the only movement seen was on Zenith 2022s and FIDBAN 2022s which strengthened by c.4bps apiece.


Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.


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