Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Thursday, August 15, 2019 / 09:00 AM / By Zedcrest Capital / Header
Image Credit: gridnigeria
The T-bills market traded on a significantly bearish note, recording its highest day on day uptrend in yields of c.130bps in the year to date, as offshore investors maintained aggressive selloffs on the short dated T-bill maturities.
Below
are highlights of trading activities in the Fixed Income & Forex Market on
August 14, 2019
Bonds
The FGN Bond market resumed from the break on a firmly bearish note, as market players reacted to the increasing selloffs by offshore investors in the Treasury Bills market. Yields consequently rose by c.22bps on the day, with the most impact felt on the short to mid end of the curve.
Selloffs
within the market has been largely driven by weakening global economic
fundamentals and recessionary fears, given the current inversion of the US and
UK Treasury yield curves. We expect these risk off sentiments to continue to
impact on investors’ appetite for FGN Bonds in the near term.
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
14.17 |
13.71 |
0.45 |
16.39 27-Jan-22 |
13.90 |
12.83 |
0.00 |
12.75 27-Apr-23 |
14.25 |
14.01 |
0.35 |
14.20 14-Mar-24 |
14.34 |
13.74 |
0.38 |
13.53 23-Mar-25 |
14.17 |
13.52 |
0.16 |
12.50 22-Jan-26 |
14.36 |
14.00 |
0.23 |
16.29 17-Mar-27 |
14.39 |
14.11 |
0.26 |
13.98 23-Feb-28 |
14.45 |
14.19 |
0.30 |
12.15 18-Jul-34 |
14.37 |
14.24 |
0.08 |
12.40 18-Mar-36 |
14.45 |
14.30 |
0.15 |
16.2499 18-Apr-37 |
14.50 |
14.14 |
0.19 |
14.80 26-Apr-49 |
14.50 |
14.35 |
0.09 |
Source: Zedcrest Dealing Desk
Treasury Bills
The T-bills market traded on a significantly bearish note, as offshore investors maintained aggressive selloffs on the short dated T-bill maturities. The CBN sold c.N34bn T-bills at the NTB auction held today, with stop rates clearing higher on the 182 and 364-day tenors and marginally lower on the 91-day tenor.
We expect the market to remain bearish due to continued offshore selloffs, and expectations for higher OMO clearing rates by market players.
NTB Auction Result |
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Tenor |
Rate (%) |
Offer (₦'bn) |
Sub (₦'bn) |
Sale (₦’bn) |
91-days |
9.70 |
4.38 |
15.06 |
4.38 |
182-days |
11.35 |
10.00 |
8.59 |
3.00 |
364-days |
12.00 |
20.00 |
122.88 |
27.00 |
Source: CBN
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
12-Sep-19 |
13.50 |
12.30 |
1.35 |
3-Oct-19 |
14.00 |
13.50 |
1.30 |
14-Nov-19 |
10.90 |
9.50 |
(0.05) |
5-Dec-19 |
14.00 |
13.00 |
1.85 |
2-Jan-20 |
14.00 |
13.00 |
1.70 |
6-Feb-20 |
14.00 |
12.80 |
1.50 |
19-Mar-20 |
13.25 |
12.75 |
1.10 |
2-Apr-20 |
14.00 |
12.80 |
1.80 |
14-May-20 |
13.50 |
11.80 |
1.35 |
04-Jun-20 |
13.50 |
11.80 |
1.30 |
02-Jul-20 |
13.50 |
11.80 |
1.30 |
Source:
Zedcrest Dealing Desk
Money Market
Rates in the money market inched slightly higher, as banks provided funding for the CBN’s Wholesale FX auction. The OBB and OVN rates consequently ended the session at 13.86% and 14.64%, with system liquidity currently estimated at c.N60bn positive.
We
expect rates to remain elevated in the near term, due to the relatively tight
system liquidity levels
Money Market Rates |
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|
Current (%) |
Previous (%) |
Open
Buy Back (OBB) |
13.86 |
12.14 |
Overnight
(O/N) |
14.64 |
12.86 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD rate remained unchanged at N360.90/$
(Spot) and N357.68/$ (SMIS). The NAFEX rate at the I&E window however fell
by 22k to N363.22/$, with total volume traded also down by 62% to $299m. At the
parallel market, the cash and transfer rate remained unchanged at N357.80/$ and
N363.00/$ respectively.
FX Market |
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|
Current (N/$) |
Previous ( N/$) |
CBN
Spot |
306.90 |
306.90 |
CBN
SMIS |
357.68 |
357.68 |
I&E
FX Window |
363.22 |
363.44 |
Cash
Market |
357.80 |
357.80 |
Transfer
Market |
363.00 |
363.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns traded on a significantly bearish note as investors continued to dump risky EM bonds in the wake of weakening global economic fundamentals. The Nigerian Sovereign bond yields rose higher by c.20bps during the trading session, with the 47s and 49s the most hit during the session.
IN the NGERIA Corps, we witnessed some interests in the ACCESS
21s and ZENITH 22s, whilst traders remained better sellers of the ETINL 24s.
Related News
1. Renewed
Sell-Offs on T-Bills Push Yields 1.3% Higher WoW to 12.6% as PMA Holds Today
2. T-BILL Yields
Spike by c.70bps Following Renewed Offshore Selloff
3. Treasury Yields
Trend Higher, as CBN Resumes OMO Auction
4. FMDQ Transits To
A Full-fledged Securities Exchange
5. FGN Bond Yields
Tick Higher, As Offshore Investors Resume Profit Taking
6. Average Yield on
T-Bills Instruments Marginally Advances to 11.2% Amidst Absence of OMO Auctions
7. August 2019 FGN
Savings Bonds Offer for Subscription
8. Nigerian
Eurobonds Dip Following Less Dovish US FED Stance
9. Bond Yields
Moderate Further Amid Continued Local Demand
10. NAFEX Rate Hits
Five Month High on Lower FPI Inflows
11. Investors Renew
Demand for Long Tenured FGN Bonds
12. Bullish Run
Halts as Average Yield Advanced 54bps WoW on Tight System Liquidity
13. FMDQ OTC Holds
7th AGM, Achieves 22% Turnover From Trading Activities in 2018 FY
14. Traders Take
Profit on Nigerian Eurobonds Ahead of US FED Rate Decision