OMO Auction: CBN Sells N110.51bn at the 362-DTM Only Dropping Rates by 1bp to 12.99%

Proshare

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.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.




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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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