Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Monday, June 16, 2020 / 7:56 PM / By Zedcrest Capital / Header Image Credit: Juridica
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.
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