Yields Strengthen In The Nigeria Eurobond Space As Oil Price Retraced Upward

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Wednesday, October 28, 2020 / 11:11 AM / By Zedcrest Capital / Header Image Credit: Kanal Finans


Proshare Nigeria Pvt. Ltd.


FGN Bonds

It was an active day in the FGN bond space as the lull in the market seems to seize for today. We saw sizeable traction for mid-dated bond 2034s-2037s papers. Although interest for short-dated bonds stayed healthy without sizeable matching offers, the 2034s and 2035s were the major winners in today's market as most of its trades settled around 5% levels. 2049s and 2050s opened the day weak as offers flowed into the market at the early hours, however by mid-day we saw the market turn bullish for these papers with most of its trade settling around 7.15% levels. By and Large, yields compressed by c.63bps across the benchmark curve.

We expect the demand sentiments to increase as more investor's step-in and cherry-pick on few bonds offered at attractive levels.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

2.40

0.96

(2.29)

 

12.75 27-Apr-23

3.83

0.43

(1.55)

 

14.20 14-Mar-24

2.40

1.04

(3.52)

 

13.53 23-Mar-25

3.02

1.14

(0.01)

 

12.50 22-Jan-26

3.36

3.00

(0.16)

 

16.29 17-Mar-27

3.95

3.00

(0.14)

 

13.98 23-Feb-28

4.03

3.29

(0.06)

 

14.55 26-Apr-29

4.03

3.09

(0.10)

 

12.15 18-Jul-34

5.17

4.48

(0.01)

 

12.40 18-Mar-36

5.17

4.50

(0.06)

 

16.2499 18-Apr-37

5.20

4.77

(0.05)

 

14.80 26-Apr-49

7.98

6.85

(0.01)

 

 

Treasury Bills

The OMO bills market continued in its bullish train, although we saw few offers compared to yesterdays but at poor levels. Dec-Apr bills were offered in the market within the range of 0.20%-0.25% although very few trades passed through this space as buyers stayed bided at 0.40% for these papers.  Nevertheless, Yields remained unchanged in both the OMO and NTB bills space.

Tomorrow, we expect market attention to shift to the scheduled NTB bills auction which remains heavily demanded by banks and local investors' especially the 1year paper.

 

Primary Market Auction Expectation

NTB  - 28 Oct 2020

 

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

29.84

0.20-0.60

1.0000

182 days

10.62

0.50-0.75

1.0000

364 days

93.92

0.55-1.20

2.0000

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00

NGOMO 01/05/2021

1.00

0.01

0.00

NGOMO 02/02/2021

1.00

0.01

0.00

NGOMOB 0 03/02/21

2.00

0.01

0.00

NGOMOB 0 05/11/21

2.00

0.01

0.00

NGOMOB 0 08/10/21

2.00

0.01

0.00

NGOMOB 0 09/07/21

2.00

0.01

0.00

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 02/11/2021

2.00

0.01

0.00

NIGTB 04/29/2021

2.00

0.01

0.00

NIGTB 05/13/21

2.00

0.01

0.00

NIGTB 06/10/21

2.00

0.01

0.00

NIGTB 07/01/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 09/09/21

2.00

0.01

0.00

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

 

 

Money Markets

The interbank liquidity improved by over 300% compared to yesterday as inflows from Tuesday OMO bills maturity hit the system. The market opened the day at c.N484.06BN, consequently dragging OBB and OVN rates to 1.00% and 1.75%, respectively.

We expect the market to remain at this level supported by the ample liquidity in the market plus without any major funding needs required by banks.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.00

6.00

Overnight (O/N)

1.75

6.25

 

FX Market

The IEFX window witnessed ample supply from the CBN today as traded volumes jumped by 272 %( $138.60m traded), although its closing rate remained unchanged, the range of trades widened slightly by 2k compared to yesterday trading between N380/$ and N393.11/$.

All other FX windows remained unchanged as supply level stayed low causing no trigger for rates movement.

 

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

386.00

386.00

Cash Market

460.00

460.00

Transfer Market

475.00

475.00

 

Eurobonds

The NIGERIA Sovereigns Eurobond curve strengthened in today's session, benefiting from a general improvement towards the Sub-Saharan African sovereign papers lead by EGYPT, ANGOLA, and SOAF papers. We noted improved bids across the Nigerian sovereign curve, with the NIGERIA 2027s (-08bps) the most actively traded paper on the day. Consequently, yields compressed by c.08 bps across the sovereign curve as the market was generally better bided compared to yesterday.

The NIGERIA Corporates stayed quiet for most of the trading session although we noted slight interest for the recently issued FBN papers albeit in retail size.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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