Investors Remain on the Sidelines Despite OPECplus Agreement on Output Increases

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Wednesday, July 07, 2021 / 10:15 AM / By Zedcrest Capital / Header Image Credit: Ecographics/Pexels


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FGN Bonds 

The FGN Bond market resumed on a mute note with sustained selling pressure seen at the tail-end of the FGN benchmark curve. The session opened with more supply on the previously scarce 2045s, as offers on the paper rose 25bps D/D with quotes between 12.60/45 for most of the day. The 2050s also weakened by 7bps amidst scarce bids, eventually changing hands at 13.20%. Consequently, yields expanded by c.5bps D/D on the average across the benchmark curve.

 

With yet no news on the monthly bond auction, we expect the market to maintain its current slow pace of activity with a sustained bearish bias amidst profit-taking.

 

Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

11.00

10.30

0.00

14.20 14-Mar-24 

11.20

10.70

0.00

13.53 23-Mar-25 

12.48

11.35

0.00

12.50 22-Jan-26 

12.30

12.00

0.00

16.29 17-Mar-27 

12.51

12.15

0.11

13.98 23-Feb-28 

12.50

12.00

0.00

14.55 26-Apr-29 

12.50

12.00

0.00

12.15 18-Jul-34 

12.95

12.30

0.25

12.50 27-Mar-35 

13.01

12.80

0.04

12.40 18-Mar-36 

12.93

12.55

0.00

16.2499 18-Apr-37 

12.94

12.44

0.00

9.80 24-Jul-45 

12.60

12.17

0.10

14.80 26-Apr-49 

13.10

12.92

0.10

12.98 27-Mar-50 

13.22

13.13

0.07

 

 

Treasury Bills 

Activity in the T-bills market picked up, with some demand seen across the OMO and NTB curves shrugged following the OMO maturities hitting the system. The 30 Jun 2022 paper remained in the spotlight, as trades occurred within a tighter band of 8.80/70. As funding position eased on local banks, we saw improved bids for Feb. to May. 2022 OMO papers as well as the Special T-bills (30Aug2021) but with very little supply to match.

 

We expect demand to persist in tomorrow's session, as excess cash at the disposal of local banks should force activity in the secondary market.

 

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 

The money market rates continued to dip, dropping by 0.50% on average as system liquidity was bolstered by OMO maturity inflows.  Open Buy-Back (OBB) and overnight (O/N) rates closed the session at 9.75% and 10.25% respectively.


We expect rates to remain stable for most of the week as banks take a breather from funding pressures.

 

Money Market Rates 

  

Current (%) 

Previous (%) 

Open Buy Back (OBB) 

9.75

10.25

Overnight (O/N) 

10.25

10.75

 


FX Market 

At the Interbank, the Naira/USD spot rate depreciated further by 32k to close at N411.45/$, despite a 55% D/D jump in traded volumes.

 

The parallel market had a mixed day, with the cash rate remaining stable while the transfer rate depreciated by N1 to close at N513.00/$.

 

FX Market 

 

Current (N/$) 

Previous (N/$) 

CBN SMIS 

380.69

380.69

I&E FX Window 

411.45

411.13

Cash Market 

500.00

500.00

Transfer Market 

513.00

512.00

 


Eurobonds: 

Risk-off sentiments continued to dominate the Sub-Saharan African Eurobond markets, with more offers than bids seen on the streets. Oil prices took a slight dip later in the day after the announcement of the OPEC+ deal to increase output by 2million barrels between August and December, with investors still choose to sit on the sidelines of oil-related names like the NIGERIA, ANGOLA and SENEGAL sovereign papers. Yields across the NIGERIA Sovereign curve expanded further by c.5bps on the average at the close of trading.


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Related News

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2.        NT-Bills Secondary Market Turns Bullish as Average Yield Declined 32bps to 6.6% WoW

3.        July 2021 FGN Savings Bonds Offer for Subscription

4.        NGX Lists Additional Units of FGN Bonds Issued in May and June 2021

5.        DMO Sells N330bn Worth of FGN Bonds on the Back of a Strong FGN Bond Auction Demand

6.        Coronation Merchant Bank Lists N25bn Bond on NGX

7.         Ahead of Nigerian Treasury Bills (NTB) Auction Scheduled for 30 June 2021

8.        Tepid Performance Persists as Average Yield on NT-Bills Closes Flat at 6.50% WoW

9.        Fixed Income Q2 2021: Rising Supply of Paper, Wider Yields

10.    Another Step Towards the DMO's Funding Target


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