Silent Open To The Week As The Monthly Bond Auction Draws Near

Proshare
Tuesday, August 17 2021 / 10:25 PM / by Zedcrest Capital / Header Image Credit: Corporate Finance Institute

FGN Bonds 

The FGN Bonds market opened the week on a quiet note, with most market participants taking a cautious approach ahead of the monthly bond auction. We noted demand interests across the mid- to long-ends of the benchmark curve amidst a scarcity of offers. Quotes on the 2034s and 2035s papers dipped by 15bps each as clients looking to buy the papers tried to curt sellers who remained shy. Further down the curve, the 2049s and 2050s papers saw some action, trading in little volumes around 12.50% and 12.90% levels respectively.

 

Consequently, yields closed the session down by 2 basis points on the average across the benchmark bond curve.



Proshare Nigeria Pvt. Ltd.


 

We maintain our expectation for cautious trading leading up to the auction mid-week, with participants still weighing their bets on where the auction rates are likely to close. With current market yields trading c.45bps lower than last month's auction rates, the market seems unclear on how much the DMO will use this advantage as it moves towards reaching its local borrowing targets.


Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

10.70

10.05

0.00

14.20 14-Mar-24 

11.30

10.50

0.00

13.53 23-Mar-25 

11.50

11.00

0.00

12.50 22-Jan-26 

11.60

11.00

0.00

16.29 17-Mar-27 

12.10

11.70

0.00

13.98 23-Feb-28 

12.10

11.70

0.00

14.55 26-Apr-29 

12.15

11.75

0.00

12.15 18-Jul-34 

12.80

12.50

0.00

12.50 27-Mar-35 

12.80

12.50

0.00

12.40 18-Mar-36 

12.85

12.55

0.00

16.2499 18-Apr-37 

12.80

12.45

0.00

9.80 24-Jul-45 

12.75

12.45

0.00

14.80 26-Apr-49 

12.70

12.45

(0.15)

12.98 27-Mar-50 

13.05

12.80

0.00

 

Treasury Bills 

The Treasury Bills market opened the week on an otherwise quiet note, with the only action being sustained demand seen for longer-dated NTB. The 1-year paper (11 Aug 2022) shed another 20bps as buyers rushed to snap up available offers at 6.50%, with some resistance towards anything offered lower. OMO papers remained in demand but offers remained absent for another consecutive session.


We expect trading activities to remain tepid for most of the week, with a bullish bias with not supply of papers expected this week via any auction (NTB/OMO).

 

Benchmark OMO Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NGOMOB 0 09/07/21

12.00

2.50

0.00

NGOMOB 0 10/19/21

12.00

3.75

0.00

NGOMOB 0 11/02/21

14.00

4.75

0.00

NGOMOB 0 12/07/21

14.00

5.75

0.00

NGOMOB 0 01/11/22

14.00

6.75

0.00

NGOMOB 0 02/01/22

14.00

6.75

0.00

NGOMOB 0 03/01/22

14.00

7.25

0.00

Benchmark NT-Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NIGTB 0 08/26/21

12.00

2.50

0.00

NIGTB 0 09/09/21

12.00

2.50

0.00

NIGTB 0 10/14/21

12.00

3.75

0.00

NIGTB 0 11/11/21

12.00

3.75

0.00

NIGTB 0 01/13/22

14.00

5.75

0.00

NIGTB 0 02/10/22

14.00

6.75

0.00

NIGTB 0 03/10/22

14.00

7.75

0.00

NIGTB 0 04/28/22

14.00

7.75

0.00

NIGTB 0 05/12/22

14.00

7.75

0.00

NIGTB 0 06/09/22

14.00

7.75

0.00

 

Money Markets

Money market rates ticked slightly higher in the new week's open, with system Liquidity staying low at c.+N15B. Most banks continued to source funds from large corporates to support their funding needs. Overnight (O/N) and Open Buy-Back (OBB) rates closed at 17.00% and 17.50%, in line with the theme of the week.



Proshare Nigeria Pvt. Ltd.


 

We expect money market rates to coast around the double-digit level in the absence of an immediate inflow to support market liquidity.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

17.00

16.75

Overnight (O/N)

17.50

17.25

 

FX Market

 

The FX market was relatively quiet to open the new week at both the official and parallel markets. At the IEFX space, we saw a slide in traded volumes compared to last week's closing as supply from large corporates and exporters slowed down causing rates to depreciate by c.0.21% closing the day at N411.67k/$.

 

The cash and transfer rates also closed the day unchanged compared to Friday's closing.


FX Market

Current (N/$)

Previous (N/$)

CBN SMIS

380.69

380.69

I&E FX Window

411.67

410.80

Cash Market

514.00

514.00

Transfer Market

520.00

520.00

 

Eurobonds:

 

The SSA Sovereign space opened the week on a quiet note with rates staying unchanged for most of the bond papers despite the sharp drop in oil prices to below $70pb levels. Across the NIGERIA Sovereign curve, most of the market action was seen on the 2025s and 2031s papers as prices weakened by approx. 5cents amidst the low volumes traded for today.

In other news, the Zambia market opened to the news of the landslide presidential win by the Opposition Leader Hakainde Hichilema, positive news for the Zambian financial market as we saw a major rally in bond yields, compressing by a whopping 400bps D/D.

 

The NIGERIA Corporates were also quiet for most of the session, albeit few volumes were traded on ECOTRA 2026s which saw most of the market traction for today.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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