New Week, Same Tempo: Bond Yields Pull Back After Weeks of Rally

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Tuesday, July 06, 2021 / 10:00 AM / By Zedcrest Capital / Header Image Credit: Pexels


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FGN Bonds 

Appetite for yields at the long end of the bond curve slowed in a relatively calm opening trading session for the week. We noted supply on the 2045s paper as offers for the bond flooded the streets with the paper eventually trading around 12.10% levels. The 2050s paper also saw some selling pressures, with bids being hit at 13.10% for most of the trading session.


Most of the remaining bonds on the yield curve remained silent, with yields consequently remaining unchanged on the average across the benchmark curve.

 

As the market awaits guidance for bond supply from the DMO's quarterly Bond auction calendar (yet to be released) ahead of the month's bond maturity, we expect to see sparse trading volumes with continued speculative profit-taking dominating the trades.

 

Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

11.65

11.20

0.00

14.20 14-Mar-24 

12.00

11.35

0.00

13.53 23-Mar-25 

12.20

11.60

0.00

12.50 22-Jan-26 

12.40

12.00

0.00

16.29 17-Mar-27 

12.45

12.10

0.00

13.98 23-Feb-28 

12.50

12.20

0.00

14.55 26-Apr-29 

12.50

12.20

0.00

12.15 18-Jul-34 

12.80

12.25

0.00

12.50 27-Mar-35 

13.00

12.60

(0.10)

12.40 18-Mar-36 

13.00

12.50

0.00

16.2499 18-Apr-37 

13.00

12.50

0.00

9.80 24-Jul-45 

12.80

12.40

(0.10)

14.80 26-Apr-49 

13.10

12.85

(0.05)

12.98 27-Mar-50 

13.10

13.00

(0.15)

 


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Treasury Bills 

Activity in the T-Bills market centered on the 1-year NTB paper (30 June 2022), as holders of the papers improved offers to match the adamant bids at 8.70% levels. The supply of OMO papers continued to flood the streets as local banks look to offload positions with negative returns due to double-digit funding rates.

 

We expect trading to slow down tomorrow, as OMO maturities of N136Bn hit the system and ease funding pressure.


 

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  

 


Money Markets 

The money market opened the week lower, dropping by 1.75% on the average as system liquidity levels remained positive at N180Bn. Open Buy-Back (OBB) and overnight (O/N) rates closed the session at 10.25% and 10.75% respectively

.

We expect rates to decline further tomorrow as an OMO maturity of N136Bn is expected to impact the system.


Money Market Rates 

  

Current (%) 

Previous (%) 

Open Buy Back (OBB) 

11.50

11.50

Overnight (O/N) 

12.00

12.00

 


FX Market  

Activity in the FX market picked up in the week's opening session, with most of the supply of the greenback coming via intervention sales from the CBN. The Apex bank stepped in to provide liquidity in the market, with most of the sales going to foreign portfolio investors on queue to exit the Nigerian markets. The Naira appreciated by N0.60k to close at N411.25/$, with bids ranging between N400/$ and N420.86/$ with c.$71mio in volume traded.


At the parallel market, the cash and transfer market remained unchanged for another consecutive session.


FX Market 

 

Current (N/$) 

Previous (N/$) 

CBN SMIS 

380.69

380.69

I&E FX Window 

410.70

411.50

Cash Market 

500.00

500.00

Transfer Market 

512.00

512.00

 

Eurobonds: 

July 4th celebrations in the US contributed to a quiet opening session, with Sub-Saharan Africa Eurobonds already facing risk-off sentiments following the continued stalemate of the OPEC+ deal negotiations. Yields across the NIGERIA Sovereign curve expanded by c.1bps on the average at the close of trading.

 

The NIGERIA Corporates saw a slowdown in trade activity for the first time in a while. The FIDBAN 2022S and SEPPLN 2026s were the most actively sought-after papers, with demand moving yields on both papers down by 10bps and 3bps respectively. We noted some supply on the ETNLI 2024s paper, with yields rising by 5bps on the bids by the close of the session.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.




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