Bonds & Fixed Income | |
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Thursday, November 07, 2019 / 06:00 AM / By Zedcrest Capital / Header Image Credit: Sun Nigeria
The
Treasury bills market saw a continuous bearish run as profit-takers triggered
sell-offs for short and mid-dated maturities in anticipation of higher rates at
tomorrow's OMO auction. Consequently, rates increased by an average of c0.50bps
especially on December 2019 and March 2020 bills. Yield hungry local investors
continue to search for NTBs particularly at the long end of the curve,
depressing rates to c.10.20% on the 353days NTB paper.
Below
are highlights of trading activities in the Fixed Income & Forex Market on
November 06, 2019
FGN Bonds
Yields
in the bond market declined further in today's session, compressing by c.23bps
on the average d/d as we saw more appetite for the short and mid-dated bonds.
This came as more Local Pension Funds and Asset Managers sought to re-invest
expected OMO maturities and other excess funds in light of the illiquidity of
the NTBs. The 2037 bonds compressed the most in yield terms (-46bps) as Long
term investors seek bonds with high coupon pay-out.
We
expect this bullish trend to persist in the near term as we see participants
frozen out from the OMO market buy up available bonds at current levels.
Benchmark FGN Bonds |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
12.60 |
12.01 |
(0.40) |
16.39 27-Jan-22 |
12.64 |
12.14 |
(0.08) |
12.75 27-Apr-23 |
12.60 |
12.29 |
(0.38) |
14.20 14-Mar-24 |
12.36 |
12.17 |
(0.30) |
13.53 23-Mar-25 |
12.58 |
11.97 |
(0.22) |
12.50 22-Jan-26 |
12.99 |
12.75 |
(0.15) |
16.29 17-Mar-27 |
13.44 |
12.85 |
(0.06) |
13.98 23-Feb-28 |
13.24 |
13.01 |
(0.32) |
12.15 18-Jul-34 |
13.66 |
13.28 |
(0.13) |
12.40 18-Mar-36 |
13.66 |
13.41 |
(0.14) |
16.2499 18-Apr-37 |
13.34 |
13.02 |
(0.46) |
14.80 26-Apr-49 |
13.90 |
13.81 |
(0.09) |
Source: Zedcrest Dealing Desk
Treasury
Bills
The
Treasury bills market was bearish as profit-takers triggered sell-offs for
short and mid-dated maturities in anticipation of higher rates at tomorrow's
OMO auction.
We
expect to see decent demand at tomorrow's OMO auction with Foreign Investors
pouring in at these current yield levels as the NTB vs OMO Bills dichotomy
lingers.
Benchmark Treasury Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14-Nov-19 |
14.00 |
12.75 |
1.97 |
5-Dec-19 |
12.50 |
11.55 |
0.50 |
2-Jan-20 |
12.50 |
11.00 |
0.50 |
6-Feb-20 |
12.55 |
11.00 |
0.05 |
19-Mar-20 |
12.25 |
10.00 |
0.10 |
2-Apr-20 |
12.60 |
12.20 |
0.35 |
14-May-20 |
12.25 |
11.75 |
0.25 |
4-Jun-20 |
12.75 |
11.30 |
0.25 |
2-Jul-20 |
12.00 |
10.60 |
(0.50) |
13-Aug-20 |
12.90 |
12.30 |
0.05 |
3-Sep-20 |
12.85 |
12.55 |
(0.05) |
1-Oct-20 |
12.75 |
11.25 |
0.25 |
Source: Zedcrest Dealing Desk
Money
Market
The OBB and OVN rates remained at single digits inching up slightly from
yesterday's closing as there were no significant funding activities by
commercial banks today. Market liquidity is estimated at c.N226.86bn positive
as at close of business today.
Interbank rates are expected to remain low due to OMO maturities of
c.N366Bn and Retail FX refunds of about N200bn hitting the system tomorrow.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
4.50 |
3.57 |
Overnight (O/N) |
5.50 |
4.14 |
Source: FMDQ, Zedcrest
FX Market
The Spot, SMIS and parallel market rates remained flat at the FX
interbank market. However the I&E FX window rate appreciated by 24k to
close at N362.66$ as liquidity improved today.
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.95 |
306.95 |
CBN SMIS |
358.51 |
358.51 |
I&E FX Window |
362.66 |
362.90 |
Cash Market |
358.00 |
358.00 |
Transfer Market |
362.50 |
362.50 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns remained
bearish across all maturities despite the recent increase in oil prices which
is usually positive for oil producing Sovereign papers. Yields expanded further
by an average c6bps across the NGERIA curve.
The NIGERIA Corps saw flurry of
sellers across most tracked corp tickers. The ACCESS 2021, FIDBAN 2022 and
ETINL 2024 took the most hit in today's trading session with yields expanding
by +26bps, +84bps and +12bps respectively.
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