High Market Liquidity Triggers Market Demand for Bills

Proshare

Wednesday, January 6, 2021 / 8:48 AM / By Zedcrest Capital / Header Image Credit: Cottonbro/Pexels


Proshare Nigeria Pvt. Ltd.

FGN Bonds

Today, it was a slightly active day in the FGN bond space compared to yesterday's witnessing trickles of trade still at the curve's belly and tail. Most of the trades closed at an average of 8.10% in 2034s and 2035s papers and 2049s at 8.20%. Consequently, we can induce that offers compressed by an average of c10bps and c5bps D/D for the mid and long-dated bonds, respectively. We also a few trades for the 2027s paper, which printed around the 6.35% level. By and large, most of the movement on the sovereign yield curve happened at the short-end of the curve which compressed by an average of c.10bps.

 

We do not expect market bullish to halt soonest; thus, we expect local investors who are sorting to invest their funds at a reasonable level to look into taking such decisions now.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

n16.39 27-Jan-22

3.25

0.24

(0.48)

 

12.75 27-Apr-23

5.70

2.61

(0.30)

 

14.20 14-Mar-24

6.75

3.48

0.31

 

13.53 23-Mar-25

7.10

3.90

(0.01)

 

12.50 22-Jan-26

7.21

5.90

(0.01)

 

16.29 17-Mar-27

7.00

6.23

0.10

 

13.98 23-Feb-28

8.00

5.80

0.00

 

14.55 26-Apr-29

8.29

6.80

0.00

 

12.15 18-Jul-34

8.50

7.80

0.00

 

12.50 27-Mar-35

8.56

7.80

0.00

 

12.40 18-Mar-36

8.49

7.80

0.00

 

16.2499 18-Apr-37

8.50

7.80

0.00

 

9.80 24-Jul-45

8.65

7.20

0.00

 

14.80 26-Apr-49

8.65

8.00

0.00

 

12.98 27-Mar-50

8.65

8.00

0.00

 

 

Treasury Bills

High system liquidity boosted demand for bills in the Treasury bills space as we saw demand for bills grew significantly D/D. A large number of interests were for short-mid dated bills, although by mid-day, we saw more market participants tilt towards investing in the late mid and longer-dated bills, which were offered better. 28th Sept bills settled around the early 1% levels while local dealers paid most of the Dec bills at mid-2% levels; however, most of the short-mid dated bills were offered around 0.40% making it difficult to close trades for those bills.


We expect to see demand for OMO/NTB Bills to remain tomorrow, which will remain supported by the buoyant system liquidity.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 01/05/21

4.00

0.15

0.00

NGOMOB 0 02/02/21

4.00

0.20

0.00

NGOMOB 0 03/02/21

4.00

0.20

0.00

NGOMOB 0 05/11/21

4.50

0.30

0.00

NGOMOB 0 06/08/21

4.50

0.30

0.00

NGOMOB 0 08/10/21

5.00

0.35

0.00

NGOMOB 0 09/07/21

5.00

0.50

0.00

NGOMOB 0 10/19/21

5.00

0.50

0.00



Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 12/31/20

4.00

0.15

0.00

NIGTB 0 01/14/21

4.00

0.20

0.00

NIGTB 0 02/11/21

4.00

0.30

0.00

NIGTB 0 03/11/21

4.50

0.30

0.00

NIGTB 0 04/29/21

4.50

0.30

0.00

NIGTB 0 05/13/21

4.50

0.35

0.00

NIGTB 0 06/10/21

4.50

0.35

0.00

NIGTB 0 07/01/21

5.00

0.35

0.00

NIGTB 0 08/26/21

5.00

0.50

0.00

NIGTB 0 09/09/21

5.00

0.65

0.00

NIGTB 0 10/14/21

4.00

0.15

0.00

 

Money Markets

Market liquidity increased significantly by over 68% as maturities from OMO drop into this system. The market figure crossed to over N1trillion, specifically c. N1.25trillion caused OBB and OVN rates to stay low, dropping slightly by c.44bps, closing the day at 0.63% and 1.00%, respectively.


 

We don't expect any significant turn in interbank rates as the market would most likely stay liquid for most of the week, although we might see the Apex bank take out some of this liquidity through their regular CRR debit.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

0.63

1.00

Overnight (O/N)

1.00

1.50

 

 

FX Market


We saw a slight movement in rates at the IEFX segment at the FX market with small trades volume passing through that space (c$33.51M) with its rates ranging between N387.10/$1 and N411.00/$1. The cash and transfer segment also saw movements depreciating by an average of N5.5k, closing the day at N470.00/$1 and N485.00/$1, respectively.


FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

393.83

394.30

Cash Market

470.00

464.00

Transfer Market

485.00

480.00

 

Eurobonds


The SSA space continues to strengthen in today's session, off the back of an increase in global oil, which was triggered by some of the OPEC outcomes where the Saudis surprise offer to cut 1million barrels during the next two months after convincing Russia not to raise its production.


Contrary to this, however, we saw the NIGERIA sovereign expand slightly by c.5bps which may be induced somewhat from the recent lockdown from the fast-spreading U.K variant of coronavirus threatening the world.

 

The NIGERIA Corporate papers also traded on a positive note, with some improved bids seen on almost all the tracked papers except for the ETINL 2024, which remained flat D/D.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd. 

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