Senate Gives Approval as DMO Switches Out N850bn External Borrowing Plans For Local Debt

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Wednesday, April 29, 2020 / 08:33 AM / By Zedcrest Capital / Header Image Credit: Congencis


Below are highlights of trading activities in the fixed income and forex market on April 28, 2020 

 


FGN Bonds

Activity in the Bonds market was focused at the 20yr-30yr bracket as investors scrambled for bonds following coupon payment made yesterday. 2036s and 2049s were the most actively traded in the market, starting the day offered at 11.56% and 12.40% respectively but lost approx. 35bps and 15bps by the close of trading. Yields dropped by c.27bps on the average across the benchmark bond curve.


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In other news, the DMO released a press release by the close of the market indicating that the Federal government has reappraised their borrowing plans and will be converting to source the N850BN locally as opposed to initial plans for external borrowing following the approval of the Senate.

 

We expect that the bid/offer spread would widen tomorrow in the wake of the DMO's latest directive and its attendant supply.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.20

4.04

0.02

 

16.39 27-Jan-22

7.63

5.30

(0.12)

 

12.75 27-Apr-23

9.24

8.22

(0.11)

 

14.20 14-Mar-24

10.05

7.94

(0.56)

 

13.53 23-Mar-25

10.03

7.79

(0.78)

 

12.50 22-Jan-26

9.93

8.87

(0.05)

 

16.29 17-Mar-27

11.56

11.01

(0.04)

 

13.98 23-Feb-28

11.41

10.71

(0.39)

 

14.55 26-Apr-29

11.80

10.84

(0.27)

 

12.15 18-Jul-34

11.71

10.90

(0.39)

 

12.40 18-Mar-36

11.83

11.21

(0.35)

 

16.2499 18-Apr-37

11.94

11.22

(0.29)

 

14.80 26-Apr-49

12.48

12.26

(0.15)

 

 

Treasury Bills

The intensity in the T-bills market remained low in today's session, as demand remained weak across the benchmark OMO curve. Sellers remained at the short- and mid-tenors, as banks scrambled to raise quick cash to meet short term funding obligations due to the low system liquidity. Overall very little trades were crossed, with little changes on the benchmark OMO curve.


Bids improved across the NTBs benchmark curve, ahead of the bi-weekly auction scheduled for Wednesday.


Retail demand for NTBs remains strong even at this level, we expect stop rates to close lower than the previous auction. We expect the appetite for OMO bills to remain low, as the system liquidity remains tight.


Primary Market Auction Expectation NTB - 29 April 2020

Tenor

Offer (N'bn)

Expected Stop Rate (%)

Previous Stop Rate (%)

91 days

49.84

1.70 - 1.90

1.93

182 days

10.62

2.65 - 2.70

2.74

364 days

71.07

3.75 - 4.00

4.00

 

 

                                   Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 5/14/2020

10.00

9.60

(0.25)

NGOM 6/4/2020

11.00

6.00

0.00

NGOM 7/2/2020

11.00

7.00

0.00

NGOM 8/13/2020

11.00

8.25

(0.25)

NGOM 9/3/2020

11.00

8.50

1.00

NGOM 10/1/2020

11.00

8.00

0.00

NGOM 11/03/2020

11.00

8.00

0.00

NGOM 12/01/2020

11.00

8.50

(0.50)

NGOM 01/05/2021

11.50

10.00

0.00

NGOM 02/02/2021

11.50

9.00

(0.50)

NGOM 03/02/21

11.50

9.00

0.00

                                                                         

 

 

                                    Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.50

0.00

NIGTB 1-Oct-20

4.00

0.50

(1.00)

NIGTB 12-Nov-20

4.00

0.50

(0.50)

NIGTB 14-Jan-21

4.00

0.50

(0.50)

NIGTB 11-Feb-21

4.00

0.50

(0.50)

 


Money Markets

Average Over Night (O/N) and Open Buy Back (OBB) rates decreased by 374 bps) and 342bps respectively to close at an average of 10.83% and 12.08%, as the inter-bank market system liquidity opened higher at c.213bn following FGN bond coupon payments. Despite ease liquidity, we noted a few banks still opted for the funds from the Standing Lending Facility (SLF) window.


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We expect rates remain tight and in the double-digit range but may ease out slightly by Thursday, as OMO maturity hit the system.


                       Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

10.83

14.57

Overnight (O/N)

12.08

15.50

  

FX Market


The dearth of dollar liquidity persisted in the interbank I&E market today as there was very little activity and most market players were bid between N383.00 and N387.00 to the dollar. The CBN rates remained unchanged again for another consecutive session while the Naira continued to weaken at the parallel market, losing 1.1% of its value on both the cash and transfer rates.

We expect that Naira may continue to depreciate as the reduction in dollar supply is expected to put a lot of pressure on the parallel market rates.


                              FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.25

386.25

Cash Market

460.00

455.00

Transfer Market

475.00

470.00

 

Eurobonds

A typical day in the NGERIA Sovereigns with trickles of demand across the short- and mid-end of the sovereign curve with yields expanding by another c.07bps on the average across the sovereign curve.

The NGERIA Corps papers had a quiet session, with local demand concentrated on the FIDBAN 2022s.  


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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