Land-sliding Drop-in Bond Auction Stop Rate as DMO Cuts Rates by Approximately 200bps

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Thursday, October 22, 2020 / 11:01 AM / by Zedcrest Capital / Header Image Credit: Naija247news


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FGN Bonds

The FBN bond market opened extremely wide, trading on a slow and sad pace, following the civil unrest and escalation of the popular protest happening in Nigeria. Participants traded with little interest in market activities for most of the trading session triggered by the distractions from the Bond auction scheduled to hold today. However, we saw interest in 2049s and 2050s paper which traded around 6.85% levels for most of the trading session. We also saw few offers on the auction bonds which hardly traded as buyers weren't interested in sealing at the levels they were been offered (5.10% and 6.05% respectively).


At the bond auction, The DMO shocked the market by cutting rates by an average of c.215bps on the two papers offered with demanding spurring high despite the civil unrest in the country. The average bid-to-cover ratio on both papers stood at 5.65X although more of demand weighted on the   2035s paper.


Tomorrow, we expect unmet demand for today's auction to spill into the market which may most likely make yield further drop in the fixed income space.


FGN Bonds Auction Result- Oct. 21, 2020

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn) 

Previous Rate (%)

Changes

Mar-35

4.97

15.00

169.20

20.00

8.52

-0.0355

Jul-45

6.00

15.00

66.67

25.00

8.90

-0.0290

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

5.55

-0.23

3.29

 

12.75 27-Apr-23

6.21

-6.92

3.41

 

14.20 14-Mar-24

5.95

-2.60

3.23

 

13.53 23-Mar-25

6.98

-0.87

3.93

 

12.50 22-Jan-26

7.78

-1.27

3.97

 

16.29 17-Mar-27

9.85

1.49

5.62

 

13.98 23-Feb-28

8.49

0.68

4.03

 

14.55 26-Apr-29

9.00

1.81

4.46

 

12.15 18-Jul-34

9.25

2.58

4.04

 

12.40 18-Mar-36

9.52

3.01

3.32

 

16.2499 18-Apr-37

11.37

3.86

4.88

 

14.80 26-Apr-49

8.51

5.98

1.19

 

 

Treasury Bills

For Treasury Bills, Both the OMO bills and NTB was quiet with little or no trade passing through that space. Although market participants remained one-way all demands with no offers to match up these appetites.

We expect the market to remain bullish supported by current system liquidity levels. However, the likelihood of OMO auction tomorrow may bring slight hope of trickles of bears in the bills space.

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00

NGOMO 01/05/2021

1.00

0.01

0.00

NGOMO 02/02/2021

1.00

0.01

0.00

NGOMOB 0 03/02/21

2.00

0.01

0.00

NGOMOB 0 05/11/21

2.00

0.01

0.00

NGOMOB 0 08/10/21

2.00

0.01

0.00

NGOMOB 0 09/07/21

2.00

0.01

0.00

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 02/11/2021

2.00

0.01

0.00

NIGTB 04/29/2021

2.00

0.01

0.00

NIGTB 05/13/21

2.00

0.01

0.00

NIGTB 06/10/21

2.00

0.01

0.00

NIGTB 07/01/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 09/09/21

2.00

0.01

0.00

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

 

Money Markets

The flood of liquidity in the interbank space caused rates to stay stagnant D/D as liquidity stood at c.863.89BN positive. Consequently, OBB and OVN rates remained at 0.50% and 0.80% respectively.

Interbank rates are expected to coast around these levels tomorrow following additional inflows from OMO maturities of c.285BN that will hit the system.

 

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

0.50

0.50

Overnight (O/N)

0.80

0.80

 

FX Market

Trading activity in the interbank I&E market dropped further today, with traded volumes down by 300% ($6.02mio traded) largely fueled by the unrest in the country. Bids ranged within a tighter band of N3.84k while the closing rate depreciated by N0.46k to close at N385.29/$.

 

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

385.29

385.75

Cash Market

459.00

459.00

Transfer Market

473.00

474.00

 

 

Eurobonds

The NIGERIA Sovereigns witnessed a bit bearish in today's trading session as we saw the reaction from escalated protest and oil prices dropping below $40 for brent crude today. Consequently, we saw yields expanded by approximately c.31bps across the benchmark curve. 

The NIGERIA Corporates traded on a rather drab note although whilst we saw few interests for the newly issued FBN 2025 Eurobond witnessing slight action although trading very weak, with its prices going slightly up by 40cents compared to its closing price.

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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