Yields Continue to Recover, as the CBN Records a NO SALE at the OMO Auction

Proshare

Thursday, March 19, 2020 / 7:25 PM / Zedcrest Capital / Header Image Credit: BusinessDay

 

FGN Bonds

The Bonds Markets continued its recovery in today's session, as bids continued to improve across the bond curve. As oil prices continue to nose-dive, we continued to see significant selling by Foreign Portfolio Investors, especially the mid- (2028s & 2029s) to long-end (2049s), as they looked exit their exposure to government debt instruments. This was however matched by decent demand by local players, who cherry-picked market offers to reinvest excess cash from maturing OMO bills (c.N300bn) and bond coupon payments seen throughout the week. Yields compressed by c.22bps across the benchmark bond curve.


We expect decent demand to ensue in tomorrow's session, as local players continue to cherry-pick bond maturities at attractive yields, as they look to reinvest excess funds.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

8.32

6.87

(0.82)

 

16.39 27-Jan-22

9.15

6.72

(1.15)

 

12.75 27-Apr-23

10.95

9.96

0.15

 

14.20 14-Mar-24

12.72

10.29

(0.03)

 

13.53 23-Mar-25

13.25

11.13

0.00

 

12.50 22-Jan-26

13.00

12.61

(0.50)

 

16.29 17-Mar-27

13.15

12.69

0.16

 

13.98 23-Feb-28

13.15

12.64

(0.35)

 

14.55 26-Apr-29

13.57

12.66

0.07

 

12.15 18-Jul-34

13.40

12.45

(0.10)

 

12.40 18-Mar-36

13.40

12.33

(0.10)

 

16.2499 18-Apr-37

13.40

12.26

(0.10)

 

14.80 26-Apr-49

13.40

12.80

(0.08)

 

 


Treasury Bills

The Treasury Bills market traded on a quiet note, as rates remained stable D/D across the OMO curve. As seen in the last couple of days, the mid-end of the OMO curve (Sept/Oct) saw the most demand pressure, as market players reinvested OMO maturities of c.N300bn.  At the announcement of an OMO auction, market went flat, with the spread between market bid/offer widening further, despite a NO SALE recorded later on. However, yields dropped by an average of c.14bps across the benchmark OMO curve.


The NTB side witnessed some slight sell-off at the mid-end of the curve, as yields expanded by an average of c.142bps across the benchmark NTB curve.


With the NO SALE at today's OMO auction, we expect yields to plunge further in tomorrow's session, as market players are left with little or no choice than to reinvest excess cash in the secondary market.


OMO Auction Result  - 19 March 2020

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

89 day

NIL

10.00

NIL

NO SALE

180 day

NIL

10.00

2.00

NO SALE

362 day

NIL

130.00

16.00

NO SALE


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 2-Apr-20

18.00

13.00

0.00

NGOMO 14-May-20

18.00

13.00

0.00

NGOMO 4-Jun-20

18.00

13.00

0.00

NGOMO 2-Jul-20

18.00

13.00

0.00

NGOMO 13-Aug-20

18.00

13.00

0.00

NGOMO 3-Sep-20

17.50

15.00

(0.50)

NGOMO 1-Oct-20

17.50

13.00

(0.50)

NGOMO 3-Nov-20

17.50

13.00

(0.50)

NGOMO 1-Dec-20

17.50

13.00

0.00

NGOMO 5-Jan-21

17.50

13.00

0.00

NGOMO 02-Feb-21

17.50

13.00

0.00

 


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

3.00

1.50

0.30

NIGTB 2-Jul-20

3.50

1.00

(0.10)

NIGTB 1-Oct-20

4.00

1.00

(1.00)

NIGTB 12-Nov-20

5.00

2.00

(0.25)

NIGTB 14-Jan-21

5.50

3.00

(0.20)

NIGTB 11-Feb-21

6.00

2.00

0.00

                                                                         


Money Market

Interbank rates plummeted by c.480bps, as inflows from OMO maturities (c.N300bn) boosted system liquidity, opening with c.N588.23bn positive. OBB and OVN rates dropped further to close at 5.20% and 5.90% respectively.


We expect rates to remain in the single-digit region, as banks have no known/significant funding pressure in tomorrow's session.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.20

10.40

Overnight (O/N)

5.90

11.20

 

FX Market

At the Interbank, the Naira/USD spot and SMIS rates remained stable to close at N307.00/$ and N358.51/$ respectively. At the I&E FX window, the Naira further depreciated against the dollar by N2.33k to close at N370.35/$.


At the parallel market, cash and transfer rates were unchanged D/D to close at N375.00/$ and N400.00/$ respectively.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

358.51

358.51

I&E FX Window

370.35

368.02

Cash Market

375.00

375.00

Transfer Market

400.00

400.00

 


Eurobond

Yields in the NGERIA Sovereign tickers weakened further, as investors continue to sell-off across the sovereign curve, due to severely low global oil prices which stands at $28.67 per barrel (at the time of this report). Yields spiked by an average of c.112bps across the benchmark sovereign curve.


The NGERIA Corps tickers traded on a flat note, as we recorded little D/D change among most tracked papers. Yields on the SEPLLN 2023s were the only movers, as it weakened by c.20bps.


Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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