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T.Bills Yields Drop Further As Market Liquidity Persists

Bonds & Fixed Income	1044 VIEWS
Bonds & Fixed Income
1044 VIEWS

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Wednesday, October 09, 2019 / 08:00 AM / By Zedcrest Capital / Header Image Credit: Pixabay

Activity in the T-bills market remained bullish, as yields further nose-dived by c.25bps across all tenors. Short end maturities went as low as 10.75%, while on the long-end, yield were as low as 12.8% at close of trading. There's a sentiment among market players that CBN wants rates to be at these low positons, so as to reduce cost of fund on interest repayments. Market still remains very liquid, which also has a direct effect on the bullish trend noticed in the last couple of days.

Below are highlights of trading activities in the fixed income and forex market today

Bonds

The Bond market was active today, as we noticed improved bids across all maturities but noticed very little trades done. We also noted significant activity on the 2030s and 2040s.

We still expect the same to persist tomorrow as investors remain cautious.

Benchmark FGN Bonds
Description	Bid (%)	Offer (%)	Day Change (%)
14.50 15-Jul-21	14.33	13.54	0.00
16.39 27-Jan-22	14.17	13.74	0.00
12.75 27-Apr-23	14.38	14.30	0.01
14.20 14-Mar-24	14.18	13.74	0.00
13.53 23-Mar-25	14.20	14.06	(0.04)
12.50 22-Jan-26	14.26	14.11	0.03
16.29 17-Mar-27	14.28	14.09	0.01
13.98 23-Feb-28	14.34	14.25	(0.02)
12.15 18-Jul-34	14.51	14.35	0.00
12.40 18-Mar-36	14.51	14.35	0.01
16.2499 18-Apr-37	14.60	14.32	0.00
14.80 26-Apr-49	14.66	14.61	0.00

Source: Zedcrest Dealing Desk

Treasury Bills

Activity in the T-bills market remained bullish, as yields further nose-dived by c.25bps across all tenors.

We still expect market to be bullish and yields trend lower at the advent of CBN not issuing OMO

Benchmark Treasury Bills
Description	Bid (%)	Offer (%)	Day Change (%)
14-Nov-19	12.25	11.25	(0.35)
5-Dec-19	12.25	11.25	(0.55)
2-Jan-20	12.60	11.65	0.50
6-Feb-20	12.60	11.80	(0.20)
19-Mar-20	12.20	11.50	(0.60)
2-Apr-20	12.25	11.50	(0.55)
14-May-20	12.20	12.10	(0.90)
04-Jun-20	13.00	11.00	0.00
02-Jul-20	12.75	12.26	(0.20)
13-Aug-20	12.75	12.26	(0.35)
3-Sep-20	13.20	12.50	0.00
1-Oct-20	13.20	12.50	0.00

Source: Zedcrest Dealing Desk

Money Market

Money market rates slightly dipped from yesterday by an average of c.50bps from last week. Market rates remain very low as the system is still awash with liquidity. OBB and OVN rates closed today at 3.07% and 3.79% respectively.

We expect money market rates to still remain at these levels barring any CBN mop-up.

Money Market Rates
	Current (%)	Previous (%)
Open Buy Back (OBB)	3.07	4.00
Overnight (O/N)	3.79	4.79

Source: FMDQ, Zedcrest

FX Market

At the interbank, the Naira/USD spot rate remained stable at N307.00/$ while the SMIS rates remained stable at N358.13/$. At the I&E window, the closing rate for the Naira further increased by 8k to close the day at N362.45/$.

The cash and transfer rates at the parallel markets also saw no change, closing at N357.80/$ and N362.50/$ respectively.

FX Market
	Current (N/$)	Previous ( N/$)
CBN Spot	307.00	307.00
CBN SMIS	358.13	358.13
I&E FX Window	362.45	362.37
Cash Market	357.80	357.80
Transfer Market	362.50	362.50

Source: CBN, FMDQ, REXEL BDC

Eurobonds

Trading activity in the NGERIA Sovereigns and Corps papers was significant. We had improved demand by investors for the second day running on some corp papers.

We still expect significant demand in some local corp papers

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