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Somber Day in the Fixed Income Space as the MPC Maintains Rates across All Boards

Bonds & Fixed Income	898 VIEWS
Bonds & Fixed Income
898 VIEWS

Thursday, March 26, 2020 / 7:42 AM / By Zedcrest Capital / Header Image Credit: MoneyMarket

Below are highlights of trading activities in the fixed income and forex market on March 26, 2020

FGN Bonds

The Bonds Markets traded on a quiet note, as axes were few and far between across the curve. We saw very few order-driven demand on the mid-end (2028s), as market players traded cautiously ahead of today's Bond PMA outcome. Yields compressed by an average of c.11bps across the benchmark bond curve.

We still expect the market players to tread cautiously, as attention shifts to tomorrow's bond PMA.

Benchmark FGN Bonds
Description	Bid (%)	Offer (%)	Day Change (%)
14.50 15-Jul-21	7.89	5.60	0.03
16.39 27-Jan-22	8.01	6.15	(1.11)
12.75 27-Apr-23	12.14	10.81	0.20
14.20 14-Mar-24	12.88	11.03	(0.47)
13.53 23-Mar-25	12.97	10.88	(0.14)
12.50 22-Jan-26	12.74	12.18	(0.25)
16.29 17-Mar-27	13.26	12.26	0.05
13.98 23-Feb-28	13.23	12.75	0.02
14.55 26-Apr-29	13.29	12.49	0.09
12.15 18-Jul-34	13.20	12.42	0.00
12.40 18-Mar-36	13.23	12.33	0.03
16.2499 18-Apr-37	13.21	12.64	0.01
14.80 26-Apr-49	13.42	13.00	0.06

Treasury Bills

The Treasury Bills market continued on its quiet trend, as client-driven sentiment on OMO bills persisted. Market players still swamped the mid-end of the OMO curve, as yields remained attractive. We saw some slight client demand on the short-end of the curve but with very few deals consummated. Yields remained unchanged across the benchmark OMO curve.

The NTB side traded on a flat note, as we saw slight demand was seen at the mid-end of the NTB curve. Yields dropped by an average of c.171bps across the benchmark NTB curve.

We expect to see more client-driven demand on the mid-end of the OMO curve, as yields seem attractive to market players.

Benchmark OMO Bills
Description	Bid (%)	Offer (%)	Day Change (%)
NGOMO 2-Apr-20	18.00	9.00	1.00
NGOMO 14-May-20	13.50	11.00	(4.00)
NGOMO 4-Jun-20	17.50	10.00	0.00
NGOMO 2-Jul-20	18.00	11.00	0.50
NGOMO 13-Aug-20	18.00	11.00	0.50
NGOMO 3-Sep-20	18.00	14.50	0.50
NGOMO 1-Oct-20	18.00	11.00	1.00
NGOMO 3-Nov-20	18.00	11.00	0.50
NGOMO 1-Dec-20	18.00	12.50	0.50
NGOMO 5-Jan-21	17.50	12.00	0.00
NGOMO 02-Feb-21	17.00	10.00	(0.50)
Benchmark NTBills
Description	Bid (%)	Offer (%)	Day Change (%)
NIGTB 2-Apr-20	3.25	1.00	(0.25)
NIGTB 2-Jul-20	3.50	1.00	(1.00)
NIGTB 1-Oct-20	4.50	1.00	(1.50)
NIGTB 12-Nov-20	4.50	1.00	(2.50)
NIGTB 14-Jan-21	4.50	3.00	(2.50)
NIGTB 11-Feb-21	4.50	2.00	(2.50)

Money Market

System Liquidity opened with N576.17bn positive, as FAAC inflows further bolstered an already buoyant system. OBB and OVN rates dipped by c.140bps to close the day lower at 3.00% and 3.50% respectively.

We expect rates to remain depressed as OMO maturities of c.N75bn further boosts an already buoyant system liquidity.

Money Market Rates
	Current (%)	Previous (%)
Open Buy Back (OBB)	3.00	4.83
Overnight (O/N)	3.50	5.25

FX Market

At the interbank, the Naira/USD spot and SMIS rates remained unchanged D/D at N361.00/$ and N358.51/$ respectively. At the I&E FX window, the Naira further appreciated against the dollar by 28k to close at N380.25/$.

At the parallel market, cash and transfer rates were unchanged at N396.00/$, and N410.00/$ respectively.

FX Market
	Current (N/$)	Previous ( N/$)
CBN Spot	361.00	361.00
CBN SMIS	358.51	358.51
I&E FX Window	380.25	380.53
Cash Market	396.00	396.00
Transfer Market	410.00	410.00

Eurobond

Yields in the NGERIA Sovereign market, recovered slightly D/D, as we saw demand across the curve. Despite Nigeria's government cut in crude oil prices to clear out the glut in cargoes, benchmark oil prices improved D/D by c.6.97% to clear at $29.91 per barrel. Yields compressed by c.35bps across the sovereign curve.

The NGERIA Corps tickers traded on a quiet note, as yields remained relatively unchanged D/D among most tracked papers, with only the ETINL 2024s having a significant move, weakening by c.6.41% to close the day.