A Quiet Trading Session as Global Oil Pressure Weigh on Nigerian Sovereign Eurobonds

Proshare

 Wednesday, September 11, 2019 / 07:30AM / Zedcrest Capital / Header Image Credit: Kscripts


Concerns of global oil supply cuts as a shuffle in President Trump's signalled a possible way to a deal with Iran, thus pressuring the NGERIA Sovereigns to give up previous gains in today's session. Yields expanded by c.11bps on the average across the curve. We expect continued volatility in the Nigerian sovereign papers in tandem with the performance of global oil prices.

 

Below are highlights of trading activities in the fixed income and forex market on September 10, 2019

 

Bonds

The Bond market had a quiet trading session, with very little flows seen on select maturities. Yields compressed marginally by c.1bps on the average across the benchmark Bond curve. We noted some selling pressure at the mid-end of the curve, most especially the FGN 2026s and 2027s maturities.

 

As demand remains weak for bonds at current levels, we maintain our expectations for cautious trading sentiments in the coming trading sessions.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.27

13.90

0.00

16.39 27-Jan-22

14.31

14.07

(0.13)

12.75 27-Apr-23

14.45

14.26

0.02

14.20 14-Mar-24

14.26

13.98

(0.02)

13.53 23-Mar-25

14.28

13.87

0.00

12.50 22-Jan-26

14.26

14.20

0.00

16.29 17-Mar-27

14.21

14.17

0.01

13.98 23-Feb-28

14.21

14.13

(0.01)

12.15 18-Jul-34

14.58

14.41

0.00

12.40 18-Mar-36

14.62

14.40

(0.02)

16.2499 18-Apr-37

14.65

14.44

0.00

14.80 26-Apr-49

14.60

14.51

0.01


Source: Zedcrest Dealing Desk

 

Treasury Bills

The 2-day bullish run witnessed in the Treasury bills market came to a halt reduced system liquidity hampered position-taking by market participants. We noted some demand for maturities dated Jan. to Feb. 2020 as well as the long end (Aug. 2020 maturities).

 

We expect a cautious trading session tomorrow, as market participants focus on the PMA Yields with expectations for higher stop-rates.


 

NTB Auction Expectation - 11 Sept. 2019

Tenor

Previous Stop Rate (%)

Offer (N'bn)

Expectation

(%)

91 day

11.10

14.00

11.10 - 11.45

182 day

11.59

129.65

11.65 - 12.00

364 day

12.89

158.65

13.00 - 13.25

 

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

3-Oct-19

12.50

11.75

0.50

14-Nov-19

12.75

12.00

0.00

5-Dec-19

11.80

11.35

(0.65)

2-Jan-20

12.70

12.20

0.05

6-Feb-20

12.80

12.30

0.05

19-Mar-20

12.40

12.15

(0.10)

2-Apr-20

13.00

12.50

0.00

14-May-20

13.25

12.95

0.00

04-Jun-20

13.30

12.80

0.00

02-Jul-20

13.20

12.80

0.00

13-Aug-20

13.50

13.35

0.00

Source: Zedcrest Dealing Desk

 

Money Market

Interbank funding rates increased off the back of liquidity mop-up by the CBN via an OMO auction and Wholesale FX funding the previous day. The OBB and OVN rates consequently ended the session at 12.14% and 12.93% respectively, with system liquidity estimated to have closed at c.N151bn positive

 

We expect rates to remain pressured in tomorrow's session, with some respite expected at the close of the week off coming OMOM maturities.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.14

7.14

Overnight (O/N)

12.93

8.31

Source: FMDQ, Zedcrest 

 

FX Market

At the interbank, the Naira/USD spot rate appreciated by 5k to close at N306.85/$ while the SMIS rate remained stable at N358.02/$. At the I&E window, continued supply caused the Naira to appreciate by 38k to close at N361.80/$. At the parallel market, the cash lost 20k to close at N357.70/$ while the transfer rate remained stable at N362.50/$.


FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.85

306.90

CBN SMIS

358.02

358.02

I&E FX Window

361.80

362.18

Cash Market

358.00

357.70

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

Activity in the NGERIA Corps was also muted, however, we saw some better sellers on the ETINL 2024s while the FIDBAN 2022s saw some demand interest.

 


Proshare Nigeria Pvt. Ltd.


 

Proshare Nigeria Pvt. Ltd.

 


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Proshare Nigeria Pvt. Ltd.

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