Quiet Bond Market as COVID-19 Fears Creates Uncertainty Among Investors

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Monday, March 23, 2020 / 9:39 PM / Zedcrest Capital / Header Image Credit: Money Check

 

FGN Bonds


The Bonds Markets opened the week on a quiet note, as we saw lethargic activities across the bond curve, stemming from the growing number of Coronavirus cases. Spread between bid and offer was wide, as market players traded cautiously ahead of the outcome in tomorrow's MPC meeting and Bond auction on Wednesday. The mid-end of the curve (2028s) saw some slight demand as market participants seemed comfortable at the belly of the yield curve. Consequently, yields compressed by an average of c.3bps across the benchmark bond curve.


We expect a quiet market in tomorrow's session, as investors look towards the outcome of the MPC meeting.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

7.91

6.12

(0.46)

 

16.39 27-Jan-22

9.14

6.72

(1.17)

 

12.75 27-Apr-23

11.37

10.68

0.57

 

14.20 14-Mar-24

13.20

10.99

0.63

 

13.53 23-Mar-25

12.84

11.16

0.14

 

12.50 22-Jan-26

12.99

12.49

(0.25)

 

16.29 17-Mar-27

13.21

12.63

(0.28)

 

13.98 23-Feb-28

13.21

12.68

0.26

 

14.55 26-Apr-29

13.21

12.70

(0.55)

 

12.15 18-Jul-34

13.21

12.45

0.13

 

12.40 18-Mar-36

13.21

12.33

0.36

 

16.2499 18-Apr-37

13.21

12.76

0.33

 

14.80 26-Apr-49

13.30

12.88

(0.15)

 

 


Treasury Bills


The Treasury Bills market traded on an active note, as the new week opened with renewed demand pressure on OMO bills. The mid-(Sept/Oct) to long-end had the most axes, with market players swamping at any available market offers, as CBN's No sale of last week's OMO, constituted to the  excess liquidity at the disposal of most players. At the tail-end of market, we saw supply dry up from both offshore investors and locals, as demand pressure heightened, especially on Feb/Mar OMO bills. Yields compressed by an average of c.105bps across the benchmark OMO curve.


Similarly, the NTB side recovered in today's session, as we saw buy-interest in short- to mid-tenured NTBs, as banks looked to fill-in client orders. Yields dropped by an average of c.317bps across the benchmark NTB curve.


We expect to see more demand across the OMO curve, as market players look to reinvest excess funds.


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 2-Apr-20

17.00

15.50

(1.00)

NGOMO 14-May-20

17.00

13.00

(1.00)

NGOMO 4-Jun-20

17.00

13.00

(1.00)

NGOMO 2-Jul-20

17.00

13.00

(1.00)

NGOMO 13-Aug-20

17.00

13.00

(1.00)

NGOMO 3-Sep-20

17.00

13.00

(1.00)

NGOMO 1-Oct-20

16.50

13.25

(1.50)

NGOMO 3-Nov-20

17.00

13.25

(1.00)

NGOMO 1-Dec-20

17.00

13.25

(1.00)

NGOMO 5-Jan-21

17.00

13.00

(1.00)

NGOMO 02-Feb-21

17.00

13.00

(1.00)

 


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

3.50

1.00

(5.50)

NIGTB 2-Jul-20

4.50

1.00

(4.50)

NIGTB 1-Oct-20

6.00

1.00

(3.00)

NIGTB 12-Nov-20

7.00

2.00

(2.00)

NIGTB 14-Jan-21

7.00

3.00

(2.00)

NIGTB 11-Feb-21

7.00

2.00

(2.00)

                                                                         


Money Market

System liquidity opened with c.N371bn positive, as interbank rates still opened slightly higher due to FX wholesale debit. OBB and OVN rates rose by c.140bps to close at 6.00% and 6.93% respectively.


We expect rates to remain depressed as system liquidity remains buoyant and no significant funding by banks.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

6.00

4.80

Overnight (O/N)

6.93

5.30

  

FX Market

With last week's exchange rate adjustment by the CBN across the different market segments, the Naira/USD spot and SMIS rates reflected the change to close at N360.00/$ and N358.51/$ respectively. At the I&E FX window, the Naira dipped against the greenback by N8.75k to close at N380.75/$.


At the parallel market, cash and transfer rates depreciated by N20 and N10 to close at N396.00/$, and N410.00/$.

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

360.00

307.00

CBN SMIS

358.51

358.51

I&E FX Window

380.75

372.00

Cash Market

396.00

376.00

Transfer Market

410.00

400.00

 


Eurobond

The NGERIA Sovereign started the week on an active note, as yields retraced across the sovereign yield curve. As investors continue to trade oil price sentiment, we saw a sharp drop in oil prices, as it stands at $27.96 per barrel. Yields expanded by c.39bps across the sovereign curve.


Similarly, the NGERIA Corps tickers traded on a bearish note, as yields weakened among most tracked papers. Yields on the ACCESS 2021s and FIDBAN 2022s spiked by c.494bps and c.470bps respectively.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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