Bonds & Fixed Income | |
Bonds & Fixed Income | |
2637 VIEWS | |
![]() |
Tuesday, June 18, 2019 / 07:00PM /
Zedcrest Capital
The NGERIA Sovereigns saw a late positive run in the trading
session following tweets from the US president signaling a possible end to
trade tensions with China at the forthcoming G-20 summit. The sovereign papers
posted their biggest gains in recent times, adding to advances triggered by
expectations for further monetary easing sparked by a dovish tone from European
Central Bank President Mario Draghi.
Below
are highlights from activities in the fixed income and forex market today.
Bonds
Bullish sentiments returned to the FGN Bonds Market, as investors cherry-picked yields across the mid-end of the benchmark bond curve, most notably the 2027 & 2028 maturities. Consequently, yields compressed by c.7bps on the average across the benchmark bond curve.
The DMO released the offer circular for this month’s FGN Bond auction today. Whilst maintaining the overall offer amount, the DMO has shifted its attention to the 10-year bond by increasing the amount on offer to N40bn.
We
expect the positive sentiments to remain in the near term, as optimism for rate
cuts by global central banks as well as a resolution to global trade tensions
support the carry trade environment for foreign portfolio investors.
|
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.77 |
14.25 |
0.00 |
16.39 27-Jan-22 |
14.58 |
14.20 |
(0.01) |
12.75 27-Apr-23 |
14.63 |
14.32 |
0.00 |
14.20 14-Mar-24 |
14.48 |
14.15 |
0.00 |
13.53 23-Mar-25 |
14.50 |
14.40 |
(0.20) |
12.50 22-Jan-26 |
14.67 |
14.25 |
(0.08) |
16.29 17-Mar-27 |
14.50 |
14.42 |
(0.22) |
13.98 23-Feb-28 |
14.61 |
14.56 |
(0.08) |
12.15 18-Jul-34 |
14.65 |
14.56 |
(0.06) |
12.40 18-Mar-36 |
14.65 |
14.48 |
0.03 |
16.2499 18-Apr-37 |
14.65 |
14.48 |
(0.11) |
Source: Zedcrest Dealing Desk
Treasury Bills
We
witnessed sustained demand for short- to mid-dated maturities in the Treasury
Bills market during the day’s session, most notably on the December and
February maturities. Yields across the Benchmark NTB curve compressed further
by c.4bps on the average.
As
system liquidity holds at healthy levels, barring any OMO auction, we expect
the market to remain bullish in the near term. We see rates at the primary
auctions closing lower than the previous auction, a reflection of the low offer
amounts as well as current market levels.
|
||
Tenor |
Offer (N'bn) |
Expected Rate (%) |
91 days |
3.00 |
9.50 – 10.00 |
182 days |
4.00 |
11.55 - 11.70 |
364 days |
10.61 |
11.85 - 12.15 |
|
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
18-Jul-19 |
10.00 |
5.00 |
0.00 |
1-Aug-19 |
11.50 |
5.00 |
(0.50) |
12-Sep-19 |
12.00 |
10.00 |
(0.10) |
3-Oct-19 |
11.70 |
11.50 |
(0.10) |
14-Nov-19 |
12.15 |
11.40 |
0.00 |
5-Dec-19 |
12.20 |
11.50 |
0.00 |
2-Jan-20 |
12.25 |
11.95 |
0.20 |
6-Feb-20 |
12.25 |
12.10 |
0.00 |
19-Mar-20 |
12.25 |
12.05 |
0.00 |
2-Apr-20 |
12.25 |
12.05 |
0.00 |
14-May-20 |
12.30 |
12.00 |
0.00 |
04-Jun-20 |
12.30 |
12.00 |
0.00 |
Source:
Zedcrest Dealing Desk
Money
Market
OBB
and OVN rates closed the session lower at 7.21% and 7.71% respectively. Updated
financial market figures show system liquidity estimated to close the day at
c.N202bn positive.
We
expect rates to keep steady in light of reduced funding pressures for market
participants, barring an OMO auction by the CBN.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
7.21 |
8.86 |
Overnight (O/N) |
7.71 |
9.43 |
Source:
FMDQ, Zedcrest Research
FX Market
At the interbank, the Naira/USD rate remained stable to close at
N306.95/$ (spot) and N356.92/$ (SMIS), with no change either at the I&E
window which closed at N360.50/$.
The Naira also held steady at the parallel market, as both cash and
transfer rates closed unchanged at N360.00/$ and N362.50/$ respectively.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.95 |
CBN SMIS |
356.92 |
356.92 |
I&E FX Window |
360.49 |
360.50 |
Cash Market |
360.00 |
360.00 |
Transfer Market |
362.50 |
362.50 |
Source:
CBN, FMDQ, REXEL BDC
Eurobonds
Yields compressed by c.18bps on the average across the sovereign curve,
with gains across the curve. Positive sentiments also spread to some of the NGERIA
Corps tickers, as investor demand remained most notably on the ETINL 2024
paper which gained +18bps on the day.
Related News
1.
Treasury Bills
Market Sustain Bull Run As CBN Holds Off On OMO
2.
DMO Lists FRN
Dual-Tranche $2.5bn and Triple Tranche $2.86bn Eurobond on FMDQ OTC
3.
A Quiet Trading
Session as Primary Market T-Bills Auction Takes Centre Stage
4.
Market Interest
Rates Edge Upwards
5.
June 2019 FGN
Savings Bonds Offer for Subscription
6.
Average Money
Market Rate Rose By 6.61% To Settle At 11.15% Due To Constraint In System
Liquidity
7.
Ecobank Hosted
by London Stock Exchange After Successful $500m Eurobond Issuance
8.
Dangote Cement
Plc Series 8, 9 and 10 Commercial Paper To Open Soon
9.
Why Nigeria
Needs To Utilize The Green Bonds Market - Olumide Lala
10. Treasury Bills
Yields Expand Across the Curve as Market Adjusted to Anticipated Supply
11.
Federal
Government of Nigeria Issues N15 billion Series II Green Bond
12. Average Money
Market Rate Decreased By 7.04% To Settle At 4.54% Due To Buoyant System
Liquidity
13. Stanbic IBTC
Bank Plc Series 48, 49 and 50 Commercial Paper To Open On May 31, 2019