Local Demand Crawls Back in The Fixed Income Space as Market Participants Reacts to Auction Bond

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Tuesday, January 12, 2021 / 8:10 AM / By Zedcrest Capital/ Header Image Credit: RiNews


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FGN Bonds

The FGN bond space opened the new week on a drab note dragging for the most significant part of the trading session. Most Market participants stayed on the side-lines watching the general market perception of the bond auction rumours that incinerated that the DMO would most likely increase the offer in this month's auction. The market opened one-side mainly offered across the benchmark bond from the 2027s to 2050s paper. However, we saw a few trade prints on the 2027s papers at 6.45% increasing approximately c.35bps compared to Friday's offer. By and Large, yields expanded by an average of c.5bps across the benchmark curve.

 

We expect the market to continue in this sequence tomorrow, although slight demand trickles as coupon inflows enter the market on Friday.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

2.63

0.87

(0.47)

 

12.75 27-Apr-23

5.22

2.95

(0.01)

 

14.20 14-Mar-24

5.48

4.01

   

0.01

 

13.53 23-Mar-25

7.08

4.97

0.24

 

12.50 22-Jan-26

6.99

6.00

0.00

 

16.29 17-Mar-27

7.87

6.00

0.00

   

 

13.98 23-Feb-28

8.46

6.29

   

0.15

 

14.55 26-Apr-29

8.70

7.00

0.20

 

12.15 18-Jul-34

9.04

7.80

0.04

 

12.50 27-Mar-35

9.08

7.80

0.08

 

12.40 18-Mar-36

9.08

7.82

0.08

 

16.2499 18-Apr-37

9.02

7.81

0.02

 

9.80 24-Jul-45

9.59

7.18

(0.41)

 

14.80 26-Apr-49

10.00

8.00

0.00

 

12.98 27-Mar-50

10.00

8.00

0.00

 

 

Treasury Bills

The treasury bills market was flooded with a bucket of offers across the curve with no matching bills for these offers. Trickles of demand were seen for longer-dated bills, albeit no trades, as these demands were too opportunistic compared to the axes available for them. This lack of order may be linked mainly to the short-squeeze in the interbank market due to huge debts that hit that space last week. Short-dated bills around 0.20% level, mid-dated bills within the range of 0.50%-0.70%, while the longer-dated bills were offered within the range of 1.10%-1.80%.

We expect market activities to pick tomorrow as inflows from OMO maturities hit the system for the week.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 02/02/21

4.00

0.01

0.00

NGOMOB 0 03/02/21

4.00

0.01

0.00

GOMOB 0 05/11/21

4.50

0.05

   

(0.50)

NGOMOB 0 06/08/21

4.50

0.01

(0.50)

NGOMOB 0 08/10/21

4.75

0.35

(1.25)

NGOMOB 0 09/07/21

5.00

0.35

(3.00)

NGOMOB 0 10/19/21

5.00

0.35

(3.00)

NGOMOB 0 11/02/21

5.00

0.40

(3.00)

NGOMOB 0 12/07/21

5.00

   

0.60

   

-3.00

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 01/14/21

4.00

0.05

0.00

NIGTB 0 02/11/21

4.00

0.05

0.00

NIGTB 0 03/11/21

4.00

0.02

0.00

NIGTB 0 04/29/21

4.50

   

0.15

   

(0.50)

NIGTB 0 05/13/21

4.50

0.15

(0.50)

NIGTB 0 06/10/21

4.75

0.25

(1.25)

NIGTB 0 07/01/21

4.75

0.10

(1.25)

NIGTB 0 08/26/21

5.00

0.10

(1.00)

NIGTB 0 09/09/21

5.00

0.35

(3.00)

NIGTB 0 10/14/21

5.00

0.35

(3.00)

NIGTB  0 11/11/21

5.00

0.40

(3.00)

NIGTB 0 01/14/21

4.00

0.05

0.00

NIGTB 0 02/11/21

4.00

0.05

0.00

 

Money Markets

As expected, the interbank market opened the week. N134.67 positive as system liquidity squeezed out, following the CRR and Retail auction debit that hit the market on Friday. However, although rates dropped c.578bps, these new levels are still way the sub 1% level the market had hinged on for the past couple of months. OBB and OVN rates closed the day at 2.50% and 3.25%, respectively.

 

We expect the rates to slide down further tomorrow as inflows from OMO maturities boost the interbank market liquidity.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.50

8.00

Overnight (O/N)

3.25

9.30

 

FX Market

The FX space remained poorly supplied across all market segments. The IEFX window continued to trade very leanly as trade volumes remained depressed while most market participants stayed bided at N350.27/$ and N411.00/$, although its rates appreciated slightly by 6% D/D. However, for other market segments, rates remained unchanged for another trading session except for the cash market that lost N1 compared to Friday's closing.

 

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

393.33

393.50

Cash Market

471.00

470.00

Transfer Market

484.00

484.00

 

Eurobonds

The NIGERIA Sovereigns Eurobond curve continued its bullish run-in today's trading session, improving demand and more aggressive bids on the mid and long-dated bonds as oil prices continue to show a positive outlook in the international market. The belly of the curve remained the major winner shedding an average of c.04bps compared to Friday. Overall, yields compressed by an average of c.01bps across the sovereign curve.

 

The NIGERIA Corporates had a quiet session today, although the market continues to show interest in most tracked papers. The FBNNL 25s was the major gainer among the tracked papers, dropping by c.28bps compared to Friday's closing.


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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