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Friday, March 06, 2020 / 9:50 AM /By Zedcrest Capital / Header Image Credit: Biz Watch Nigeria
FGN Bonds
The Bonds Market maintained its bearish trend, as
we continue to see better offers across the bond curve. With the Federal Govt
of Nigeria's plan to carry out a mid-term review of the 2020 budget, largely
fueled by the scathing effect of the Coronavirus scourge on oil revenues, the
mid- to long-end of the curve saw better offers, despite inflows from OMO
maturities. Consequently, yields expanded by an average of 11bps across the
benchmark bond curve.
We expect the bearish outlook to prevail, as
investors remain cautious, buoyed by the uncertainty of market direction.
Benchmark FGN Bonds |
||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14.50 15-Jul-21 |
6.44 |
5.97 |
(0.23) |
|
16.39 27-Jan-22 |
7.15 |
5.24 |
(0.03) |
|
12.75 27-Apr-23 |
9.52 |
7.37 |
0.85 |
|
14.20 14-Mar-24 |
9.19 |
8.51 |
(0.15) |
|
13.53 23-Mar-25 |
9.46 |
6.94 |
(0.01) |
|
12.50 22-Jan-26 |
10.19 |
9.66 |
0.32 |
|
16.29 17-Mar-27 |
11.07 |
10.47 |
0.35 |
|
13.98 23-Feb-28 |
11.00 |
10.45 |
0.25 |
|
12.15 18-Jul-34 |
11.22 |
11.00 |
0.20 |
|
12.40 18-Mar-36 |
11.31 |
11.00 |
0.32 |
|
16.2499 18-Apr-37 |
11.21 |
10.75 |
0.20 |
|
14.80 26-Apr-49 |
12.33 |
12.25 |
(0.03) |
|
Treasury Bills
The Treasury
Bills market started the day on a quiet note, as anticipation of an OMO auction
by the CBN, caused a lethargic opening to the market. We saw improved bids at
the long-end of the curve, as the delay in the floating of an OMO auction
caused a knee-jerk reaction among some market players. At the announcement of
an auction, we saw tightened bid/offer spreads, as local players showed slight buy-interest
in Sept/Nov OMO maturities. Yields compressed by an average of c.15bps across
the benchmark OMO curve.
At the
OMO auction, the apex bank sold a total of c.N110.51bn on only the 362-DTM
tenor, with the stop rate dropping to 12.99% from the previous stop rate
(13.00%). The 82-DTM and 180-DTM had NO SALES.
The NTB
side traded on a bearish note, as we saw better offers at the long-end of the
curve. The sell-off was mostly from offshore investors, as they look to switch
NTBs to OMO bills at more profitable yields. Consequently, yields expanded by
c.58bps across the benchmark NTB curve.
We expect
a mixed sentiment in tomorrow's session fueled by depressed system liquidity,
as most banks are strapped for liquidity. We also anticipate slight demand for
the newly issued 362-DTM, as market players look to the secondary market to
fill lost bids at the auction.
OMO
Auction Results - 5 March 2020 |
||||
Tenor |
Rate
(%) |
Offer
(N'bn) |
Sub
(N'bn) |
Sale
(N'bn) |
89 day |
NIL |
10.00 |
NIL |
NIL |
180 day |
NIL |
10.00 |
NIL |
NIL |
362 day |
12.99 |
80.00 |
112.11 |
110.51 |
Benchmark
OMO Bills |
|||
Description |
Bid (%) |
Offer
(%) |
Day
Change (%) |
NGOMO 19-Mar-20 |
12.50 |
10.00 |
(0.40) |
NGOMO 2-Apr-20 |
12.50 |
9.00 |
0.00
|
NGOMO 14-May-20 |
12.50 |
10.40 |
0.00
|
NGOMO 4-Jun-20 |
12.70 |
9.00 |
0.20 |
NGOMO 2-Jul-20 |
12.50 |
10.00 |
(0.29) |
NGOMO 13-Aug-20 |
12.70 |
11.00 |
(0.05) |
NGOMO 3-Sep-20 |
12.50 |
11.30 |
(0.30) |
NGOMO 1-Oct-20 |
12.70 |
12.35 |
(0.15) |
NGOMO 3-Nov-20 |
12.50 |
11.00 |
(0.35) |
NGOMO 1-Dec-20 |
12.70 |
11.85 |
(0.15) |
NGOMO 5-Jan-21 |
12.70 |
12.30 |
(0.15) |
NGOMO 02-Feb-21 |
12.70 |
12.00 |
(0.10) |
Benchmark
NTBills |
|||
Description |
Bid (%) |
Offer
(%) |
Day
Change (%) |
NIGTB 2-Apr-20 |
5.00 |
1.00 |
0.00
|
NIGTB 2-Jul-20 |
5.00 |
1.00 |
(1.00) |
NIGTB 1-Oct-20 |
5.00 |
1.00 |
(3.00) |
NIGTB 14-Jan-21 |
5.00 |
2.00 |
(3.95) |
NIGTB 11-Feb-21 |
5.00 |
3.80 |
(4.00) |
Money Market
Interbank rates remained stable
in the double digit corridor, as OMO maturities of c.N230bn was significantly
reduced by the c.110.5bn sold at the OMO auction window. OBB and OVN rates closed
at 14.57% and 15.64% respectively, as system liquidity closed the day with
c.N220bn positive.
We expect rates to firmly remain
in double digits, despite no funding pressure anticipated by banks.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back
(OBB) |
14.57 |
14.50 |
Overnight (O/N) |
15.64 |
15.17 |
FX Market
At the Interbank, the Naira/USD spot rate and SMIS
rate remained unchanged to close at N307.00/$ and N358.51/$. The Naira further
depreciated at the I&E FX window, gaining 26k to close at N366.57/$.
The parallel market, the cash and transfer rates
remained unchanged at N358.30/$ and N368.00/$ respectively.
FX Market |
||
Current (N/$) |
Previous ( N/$) |
|
CBN Spot |
307.00 |
307.00 |
CBN SMIS |
358.51 |
358.51 |
I&E FX
Window |
366.57 |
366.31 |
Cash Market |
358.50 |
358.50 |
Transfer Market |
368.00 |
368.00 |
Eurobond
Yields in the NGERIA Sovereign tickers retraced
across the sovereign yield curve, halting days of bullish activities. This was
fueled by the news of OPEC agreeing to massively cut oil supply by 1.5million
bpd to offset the impact of the Coronavirus pandemic. Yields expanded by
c.14bps across the sovereign yield curve.
Contrastingly,
NGERIA Corps tickers traded on a bullish trend, as yields on the SEPLLN
2023s and ETINL 2024s gaining the biggest drop of c.11bps and c.20bps
respectively. The ACCESS 2021s and FIDBAN 2022s further strengthened D/D by c.3bps
and c.1bps respectively, among most tracked papers.
Related News
1.
Sell-off in the T-bills Market as Yields Continue to
Retrace Across the OMO Curve
2. First City Monument
Bank Limited Issue of up to N20bn Series 1 Commercial Paper Now Open
3. Dufil Prima Foods PLC
Series 1, 2 and 3 Commercial Paper Now Open
4. FMDQ, FC4S Lagos, UNEP,
Others Kick-Off the Nigerian Green Tagging Project
5. Average Yield Trend
15bps Higher to Settle at 4.0% Ahead of PMA
6. March 2020 FGN Savings
Bonds Offer for Subscription
7. OMO AUCTION: CBN Drops Rate Across all Tenors, with the
362-DTM Closing at 13.00%
8. Another Positive
Outcome for the DMO At the February 2020 Auction
9. The Bulls Still Out in
the T-Bills Market as DMO Drops Rates
10. DMO Request for EOI for
the Appointment of the Transaction Parties for the Issuance of FGN Eurobonds