Rates Closes Lower for Short and Mid-Dated Bills at The Treasury Bills Primary Auction

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Thursday, June 11 2020 / 09:50 AM / Zedcrest Capital / Header Image Credit: Business Finance


Proshare Nigeria Pvt. Ltd.


Below are highlights of trading activities in the fixed income and forex market on June 11, 2020 


FGN Bonds

Trading activities picked slightly in the bond spaces as we witnessed decent transaction levels on selected bonds. The 2050s was the paper of interest with participants lifting axes around 12.20% since it was offered slightly better than the 2049s paper. We also saw few interest in 2023s and 2027s albeit not so strong since participants were clearly cherry-picking on the few bonds with better axes than screen offer. At the end of the day, although yields didn't quite move in the same direction for most of the benchmark papers, it slightly expanded by an average of c.1bps on the benchmark curve.

Since the market does not expect and maturities/inflow in the interbank market tomorrow, we expect the bonds market to close the week on rather weak note.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.70

4.00

(0.07)

 

16.39 27-Jan-22

7.66

4.68

(0.05)

 

12.75 27-Apr-23

9.10

8.35

0.06

 

14.20 14-Mar-24

9.06

8.25

(0.01)

 

13.53 23-Mar-25

8.58

7.45

0.22

 

12.50 22-Jan-26

9.78

9.34

0.11

 

16.29 17-Mar-27

10.55

10.05

(0.31)

 

13.98 23-Feb-28

10.50

9.99

(0.01)

 

14.55 26-Apr-29

10.72

10.38

(0.08)

 

12.15 18-Jul-34

11.49

11.04

0.14

 

12.40 18-Mar-36

11.30

11.04

(0.06)

 

16.2499 18-Apr-37

11.34

11.08

0.09

 

14.80 26-Apr-49

12.29

12.12

0.03

 

 

Treasury Bills

The Treasury Bills market opened the day on a one-way note as the bears flooded the market with offers across the benchmark curve, however by mid-day buying interest picked for specific February maturities 02nd and 16th February bills but more love for the 16th February maturity which offered better than its pairs at 5.65% level. Most of the OMO bills were offered at better levels compared to yesterday thus causing yields to expand by average of c.33bps across the benchmark OMO curve.

The NTB side traded flat, with local investors shifting their attention to the Primary Market Auction.

At the PMA, the DMO rolled over a total of c. N90.94bn across three tenors same as the amount on offer although by redistributing their allotment on the three tenors on offer. Stop rates closed lower on the 91days and 182 days' paper by an average of c.49bps while the 364 days' barely changed compared to the previous auction rates. Demand remained skewed towards the long end, with a bid-to-cover ratio of 1.46X at the 1-year tenor.

We expect improved demand for NTBs papers in tomorrow's trading session, as local investors look to fill-in lost bids from today's Primary Market Auction.

 

Primary Market Auction  Results

NTB  - 10 June 2020

Tenor

Rate (%)

Offer (₦'bn)

Sub (₦'bn)

Sale (₦'bn)

Previous Rate (%)

Changes

91 days

2.00

1.80

21.68

4.41

2.4500

-0.4500

182 days

2.20

4.50

40.29

7.82

2.7200

-0.5200

364 days

4.02

84.64

114.97

78.71

4.0199

0.0001

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 6/4/2020

4.00

0.10

0.00

NGOM 7/2/2020

6.00

1.50

0.00

NGOM 8/13/2020

6.00

1.50

0.00

NGOM 9/3/2020

6.50

1.50

0.50

NGOM 10/1/2020

7.00

1.50

1.00

NGOM 11/03/2020

7.00

1.50

1.00

NGOM 12/01/2020

7.00

1.50

1.00

NGOM 01/05/2021

7.00

1.50

1.00

NGOM 02/02/2021

5.90

1.50

(0.15)

NGOM 03/02/21

5.95

1.50

(0.10)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.10

0.00

NIGTB 1-Oct-20

4.50

0.10

0.00

NIGTB 12-Nov-20

4.50

0.10

0.00

NIGTB 14-Jan-21

5.00

0.10

0.00

NIGTB 11-Feb-21

5.00

0.15

0.00

 

 

Money Markets

Interbank rates dropped slightly although system liquidity remain frail opening the day at c.160.23BN positive. Rates dropped by an average of c.146bps with OBB and OVN closing at 13.00% and 14.00% respectively.

We expect a further drop in rates tomorrow but not necessarily to single digits' corridor since we don't expect any major inflow in the interbank market to support interbank market activities.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

13.00

14.50

Overnight (O/N)

14.00

15.42

 

FX Market

Transaction volume increased by almost 98% D/D as a total of c.$62.28m passed through the I &E FX window causing rate to drop slightly 0.04% although most bank remained bided between 383/$ and 387/$. However, all other markets rate remained unchanged by the close of the day.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.94

387.08

Cash Market

447.00

447.00

Transfer Market

453.00

453.00

 

Eurobonds

The NGERIA Sovereign tickers opened flat, with very low trades passing through the Nigeria space. However, we saw a bit of interest for short dated papers 21s and 23s in particular causing yields to compress slightly by an average c.7bps across the sovereign yield curve.

 

The NGERIA Corps tickers also traded on a weak note although yields remained unchanged D/D for most of the tracked papers.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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