The Naira Consolidates Recent Gains As The CBN Resumes BDC Sales

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Tuesday, September 08, 2020 / 8:21 AM / Zedcrest Capital / Header Image Credit: Nairametrics


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FGN Bonds

The flows returned to the FGN Bonds market in this week's opening session, as demand intensified at both ends of the bond curve. Bids at the short-end of the curve dropped by c.50bps on the average, as demand for less duration continues to outweigh supply on those papers. At the long-end, yields broke below the 10.00% mark especially on the 2049s paper which traded at 9.95% for most of the session. We also noted demand for the 2034s and 2036s at 9.60% and 9.70% levels respectively. Consequently, yields compressed by c.21bps on the average across the benchmark curve.

We expect the demand sentiments to intensify as the week progresses as local investors continue to position against expected inflows from OMO maturities this week as well as FGN Bond coupon payments expected from next week.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

5.00

3.45

(0.85)

 

12.75 27-Apr-23

5.75

5.00

(0.25)

 

14.20 14-Mar-24

6.00

5.05

(0.40)

 

13.53 23-Mar-25

6.50

5.70

(0.70)

 

12.50 22-Jan-26

7.45

6.50

0.00

 

16.29 17-Mar-27

8.40

7.95

0.00

 

13.98 23-Feb-28

8.55

8.00

0.00

 

14.55 26-Apr-29

9.15

8.30

0.00

 

12.15 18-Jul-34

10.00

9.45

(0.15)

 

12.40 18-Mar-36

10.05

9.65

(0.10)

 

16.2499 18-Apr-37

10.10

9.85

0.00

 

14.80 26-Apr-49

10.05

9.90

(0.05)

 

 

Treasury Bills

The OMO bills market resumed the week bullish as well, as demand from local banks persisted off the back of ample system liquidity. The demand pressure was skewed towards short- and mid-tenured papers, most especially February papers which traded at 2.40% levels. Rates on August maturities pulled back slightly to 3.15% as supply from offshore players positioning towards this week's OMO auction filled the markets. Rates compressed by c.49bps on the average across the benchmark OMO curve to close the session.

The NTB space wasn't left out as bids improved across the benchmark NTB curve, closing c.21bps lower on the average, although little volumes were trades.

We expect this demand to be sustained for most of the coming week, fuelled by high system liquidity and OMO maturities of c.N265bn expected later in the week.

 

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Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 10/1/2020

2.65

0.01

(0.35)

NGOMO 11/03/2020

2.60

0.01

(0.40)

NGOMO 12/01/2020

3.50

0.01

(0.50)

NGOMO 01/05/2021

3.80

0.01

(0.20)

NGOMO 02/02/2021

3.00

0.01

(1.00)

NGOMO 03/02/21

3.75

0.01

(0.25)

NGOMO 05/11/21

4.00

0.01

(1.00)

NGOMO 06/08/21

4.75

0.01

(0.25)

NGOMO 08/10/21

4.50

0.01

(0.50)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

2.00

0.01

(0.50)

NIGTB 11/12/2020

2.40

0.01

(0.10)

NIGTB 12/31/2020

2.85

0.01

(0.15)

NIGTB 01/14/2021

2.95

0.01

(0.05)

NIGTB 02/11/2021

3.25

0.01

(0.25)

NIGTB 04/29/2021

3.25

0.01

(0.25)

NIGTB 05/13/21

3.40

0.01

(0.10)

NIGTB 06/10/21

3.75

0.01

(0.25)

NIGTB 07/01/21

3.75

0.01

(0.25)

NIGTB 08/26/21

3.80

0.01

(0.20)

 

Money Markets

Money market rates remained stable to open the week, as the interbank system remains awash with excess liquidity (c.N737.72BN positive opening figure). OBB and OVN rates remained largely unchanged, closing the session 1.38% and 2.25% respectively.

We expect the market rates to revolve around the single-digit corridor for most of this week as OMO maturities flow in later in the week.  The CBN is expected to float an OMO auction to roll over some of the maturities but this should not have a huge impact on interbank funding rates.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.38

1.63

Overnight (O/N)

2.25

2.25


 

FX Market

The interbank I&E market opening the week on a quieter note, with traded volumes down only 49% ($45.22mio traded). The range of traded rates closed tighter today, with a high of N394.63 and a low of N384.00/$. The closing rate remained little changed at N386.00/$.

The supply of dollars by the CBN to BDCs resumed today, hitting the market with an immediate impact as the cash and transfer rates both strengthened by N5.00k on the average to closing at N436/$ and 450/$ respectively.

We expect the market rates to oscillate in tandem with the supply dates from the CBN i.e. lower on Mondays and Wednesdays, while higher on the days.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

386.00

386.13

Cash Market

436.00

441.00

Transfer Market

450.00

455.00

 

Eurobonds

The NIGERIA Sovereigns opened the trading week with little changes/activity recorded. Yields on the sovereign curve weakened by a single basis point, as sentiments towards the papers aligned with another consecutive session of lower global oil prices (BRENT dropped by 1.68% to close at $42.02pb).


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd. 


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