Bonds & Fixed Income | |
Bonds & Fixed Income | |
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PROSHARE | |
PROSHARE |
Sunday, September 29, 2019 / 07:00AM / Zedcrest Capital / Header Image Credit: UBA
Below are
highlights of trading activities in the fixed income and forex market on
September 27, 2019
Bonds
The FGN bond market closed the week on a muted note, with little flows passed in the markets. We noted slightly improved offers across the short- to mid-tenured securities, as well as better buyers for some long-dated bonds notably the 2034s and 2049s. Yields consequently closed the week unchanged on the average across the benchmark Bond curve.
As we approach a
new month, we expect demand for duration to increase as investors plan
reinvestment of Bond maturities of N233.90bn later in the month.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50
15-Jul-21 |
14.30 |
13.49 |
(0.03) |
16.39
27-Jan-22 |
14.19 |
13.77 |
(0.01) |
12.75
27-Apr-23 |
14.40 |
14.28 |
0.04 |
14.20
14-Mar-24 |
14.19 |
13.66 |
0.00
|
13.53
23-Mar-25 |
14.24 |
14.00 |
0.00
|
12.50
22-Jan-26 |
14.30 |
14.08 |
0.01 |
16.29
17-Mar-27 |
14.26 |
14.10 |
0.00
|
13.98
23-Feb-28 |
14.39 |
14.16 |
0.00
|
12.15
18-Jul-34 |
14.53 |
14.36 |
(0.04) |
12.40
18-Mar-36 |
14.58 |
14.37 |
0.00
|
16.2499
18-Apr-37 |
14.60 |
14.31 |
0.02 |
14.80
26-Apr-49 |
14.63 |
14.60 |
(0.02) |
Source: Zedcrest Dealing Desk
Treasury
Bills
The Treasury bills market closed the week on a bullish note, as we saw demand for bills across the NTBills curve. The 1-year bill was the most actively traded maturity as clients covered for volumes lost at the previous day's auction and drove offered rates 38bps lower than the OMO stop rate. Yields closed the session 22bps lower on the average across the benchmark NTBills curve.
We expect demand to
persist once the market resumes trading next week supported by healthy system
liquidity. However, the CBN may ramp up aggressive mop-up auctions to manage
excess liquidity, increasing the chance for multiple OMO auctions per week.
Benchmark Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
3-Oct-19 |
12.80 |
11.80 |
(0.20) |
14-Nov-19 |
12.55 |
12.10 |
(0.35) |
5-Dec-19 |
12.15 |
11.90 |
(0.05) |
2-Jan-20 |
13.00 |
12.25 |
(0.10) |
6-Feb-20 |
12.50 |
11.90 |
(0.40) |
19-Mar-20 |
12.35 |
12.20 |
(0.15) |
2-Apr-20 |
12.85 |
12.70 |
(0.35) |
14-May-20 |
12.90 |
12.50 |
(0.40) |
04-Jun-20 |
13.10 |
12.70 |
(0.05) |
02-Jul-20 |
13.20 |
12.90 |
(0.20) |
13-Aug-20 |
13.15 |
12.90 |
(0.20) |
3-Sep-20 |
12.80 |
11.80 |
(0.20) |
Source: Zedcrest Dealing Desk
Money Market
Money
market rates increased for a second consecutive session, ticking higher by
about 2.00%, as the OBB and OVN closed the week at c.8.43% and c.9.29%
respectively. System liquidity is estimated to close at c.N500bn positive,
following debits of c.200bn for retail FX and Bond auctions.
We
expect money market rates to oscillate in tandem with system liquidity levels
in the coming week.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
8.43 |
6.43 |
Overnight (O/N) |
9.29 |
7.43 |
Source: FMDQ, Zedcrest
FX
Market
At the
interbank, the Naira/USD spot rate and SMIS rates remained stable to close the
week at N306.95/$ and N358.13/$ respectively. At the I&E window, the
closing rate for the Naira appreciated by 56k to close the week at N362.02/$.
The
cash and transfer rates at the parallel markets saw no change, closing at
N357.80/$ and N362.50/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.95 |
CBN SMIS |
358.13 |
358.13 |
I&E FX Window |
362.02 |
362.58 |
Cash Market |
357.80 |
357.80 |
Transfer Market |
362.50 |
362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA
Sovereigns continued its bullish run for the second consecutive session, as
demand was sustained for the sovereign papers. We noted more volumes traded at
the mid-end of the curve, with the 2032s (+6bps) and 2038s (+5bps) recording
the highest demand. Yields closed lower by c.3bps on the average across all the
papers on the sovereign curve.
The NGERIA
Corps likewise saw some decent demand flows, as the ZENITH 2022s (+4bps)
and ETINL 2024s (+3bps) regained some of the losses from the previous session.
Related News
1. CBN Sells
364-Day OMO T-Bills On A 46.00% Pro-rata Basis, Cuts Rates By 2bps
2.
Summary of FGN
Bond Auction Results For September 2019
3.
September 2019
FGN Bond Auction Oversubscribed
4.
DMO Struggles to
Raise Long Term Debt for a Second Consecutive Auction
5.
FMDQ Securities
Depository Goes Live, To Enhance Market Efficiency
6.
Bearish Momentum
Sustained As Average T-Bills Yield Advances 23bps WoW To 13.6%
7.
NSE Lists FGN
Savings Bonds
8.
NSE Lists Access
Bank's N30bn 7-Year 15.5% Fixed Rate Subordinated Unsecured Bonds Due 2026
9.
Money Market
Rates Crash As FAAC Inflows Bolster Liquidity
10. Coupon
Reinvestment Bullish For FGN Bonds
11. A Tale of Two
Halves: Bullish Sentiments for Bonds Reverse Upon Bond Auction Offer Release