Yield Dropped Opening The Week As Unmet Sukuk Demand Chased Benchmark Bonds

Proshare

Monday, June 16, 2020 / 7:56 PM / By Zedcrest Capital / Header Image Credit: Juridica


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The Bond Market opened the week with sustained interest seen across some of the benchmark bonds, in the aftermath of the release of the FGN Sukuk auction results which showed the heavy demand still unmet. The DMO released the circular detailing the outcome of the SUKUK auction, slated to settle tomorrow June 16, 2020, and was heavily subscribed as expected with a total subscription of N669BN while only 162.6BN was allotted to investors (4.11X bid-to-cover ratio).

Demand remained tilted towards the mid- (2028s and 2029s) and longer-dated papers (2034s and 2049s), as local investors continued to bargain-hunt for these select maturities. Consequently, yields compressed by an average of c.15bps across the benchmark bond curve.

We expect market activity to soften in tomorrow's session, as the market shifts its focus to bond auction scheduled for later this week.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.66

4.62

(0.02)

 

16.39 27-Jan-22

7.64

5.23

(0.63)

 

12.75 27-Apr-23

9.09

8.34

(0.01)

 

14.20 14-Mar-24

9.05

7.91

(0.30)

 

13.53 23-Mar-25

8.35

7.67

(0.70)

 

12.50 22-Jan-26

9.71

8.40

(0.40)

 

16.29 17-Mar-27

10.85

10.09

0.27

 

13.98 23-Feb-28

10.50

10.11

0.00

 

14.55 26-Apr-29

10.91

10.42

0.11

 

12.15 18-Jul-34

11.40

11.02

(0.09)

 

12.40 18-Mar-36

11.36

10.92

(0.07)

 

16.2499 18-Apr-37

11.39

11.05

(0.11)

 

14.80 26-Apr-49

12.34

12.12

(0.03)

 

 

Treasury Bills

The T-bills market opened on a quiet note, with quotes one-sided for the most part of the trading session. Market participants were mostly active sellers, although we saw a few bids pop up for some selected papers (Dec. and Feb. bills). Trades remained difficult to seal trades as bid/offer spreads remained wide across the OMO curve.

The NTB market was also less active, with very few trades passed. We noted few axes for the newly issued 1year paper offered at 3.20%.

We expect the bills space to remain a bit choppy, primarily driven by the levels of excess system liquidity available to local banks. 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 7/2/2020

4.81

1.50

(0.19)

NGOM 8/13/2020

6.57

1.50

0.07

NGOM 9/3/2020

6.59

1.51

0.09

NGOM 10/1/2020

7.15

1.51

(0.01)

NGOM 11/03/2020

7.19

1.51

0.04

NGOM 12/01/2020

7.23

1.51

0.43

NGOM 01/05/2021

7.28

1.51

0.48

NGOM 02/02/2021

5.80

1.51

(0.10)

NGOM 03/02/21

5.83

1.52

(0.12)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.10

0.00

NIGTB 1-Oct-20

4.50

0.10

0.00

NIGTB 12-Nov-20

4.50

0.10

0.00

NIGTB 14-Jan-21

4.00

0.10

0.00

NIGTB 11-Feb-21

4.00

0.15

0.00

 

 

Money Markets

Interbank rates continued to drop, plunging by an average c.296bps to open the week. System liquidity opened at c.N194.69BN positive, and with no significant funding pressures on the day, interbank rates closed the day in the single-digit corridor for OBB and OVN rates at 5.83% and 6.92% respectively.

We expect the low rate levels to reverse tomorrow due to the Sukuk debit of N162.6BN projected to hit the interbank market.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.83

8.83

Overnight (O/N)

6.92

9.83


 

FX Market

Transaction volumes remained very weak in the I&E FX window, with very low volumes (c. $14.29M) passing through the market causing the Naira to depreciate by N0.75k. Most banks remained bided for the most part of the trading session between N383.00/$ and N387.00/$. All other market remained stable for a second consecutive trading day.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.50

385.75

Cash Market

447.00

447.00

Transfer Market

453.00

453.00

 

Eurobonds

The NGERIA Sovereign tickers continued its bearish trend in the new week, as oil prices continued to drop due to oversupply concerns after it was announced that a trio of Gulf producers would end voluntary output cuts. We noted better offers shown across the sovereign curve, causing yields to expand by c.34bps across the sovereign yield curve.

 

The NGERIA Corps tickers traded in a similar pattern, albeit very few sellers. The Zenith 2022s was the major loser amongst the tracked papers, expanding by c.22bps by the close of the day.

 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



Related News

1.       Guinness Nigeria Plc Series 1 and 2 Commercial Paper Is Coming soon

2.      NSE Lists Dangote Cement Plc Bonds

3.      Mute Activities in Fixed Income Market

4.      Investors Remain Calm as Average Yield Closes Flat at 3.4%

5.      Rates Closes Lower for Short and Mid-Dated Bills at The Treasury Bills Primary Auction

6.      FMDQ, FSD Africa And CBI To Host Session on Green Financing

7.      Fixed Income Securities Activities Remained Depressed Triggered by Low System Liquidity

8.     Invest in FGN Monthly Bond Auction - June 2020

9.      Low Liquidity Dents Market Appetite for Fixed Income Securities

10.  Treasury Bill Auction Holds On Wednesday June 10th, 2020


Proshare Nigeria Pvt. Ltd.

 

READ MORE:
Related News
SCROLL TO TOP