A Tad Bearish Day in The FGN Bonds Market Ahead of the June 2021 FGN Bond Auction

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Monday, June 21, 2021 / 11:03AM / by Zedcrest Capital / Header Image Credit: Mechlany Advisors


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FGN Bonds 

The FGN bond market resumed the new week on a sluggish note albeit with a slight bearish bias as traders' position ahead for this week's FGN bond auction. The 2045s papers which were the most-sort after bond last week lost its bullish grip in the market as yields climbed to 13%. We also witnessed slight demand for the 2049s bonds with few trades crossing around the 13.50% handle. Overall yields expanded slightly by c.4bps across the benchmark curve.


We expect a calm trading session tomorrow as market participants redirect their focus on the coming FGN bond auction scheduled for Wednesday.

 

Benchmark FGN Bonds 

 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

12.75 27-Apr-23 

11.98 

11.04 

0.00  

14.20 14-Mar-24 

12.23 

11.55 

0.00  

13.53 23-Mar-25 

12.49 

11.37 

0.00  

12.50 22-Jan-26 

12.40 

11.55 

0.00  

16.29 17-Mar-27 

12.76 

12.53 

0.00  

13.98 23-Feb-28 

12.70 

12.40 

0.04  

14.55 26-Apr-29 

12.70 

12.35 

0.00  

12.15 18-Jul-34 

13.46 

13.00 

0.00  

12.50 27-Mar-35 

13.55 

13.10 

0.00  

12.40 18-Mar-36 

13.50 

13.01 

0.00  

16.2499 18-Apr-37 

13.40 

12.95 

0.10  

9.80 24-Jul-45 

13.40 

13.00 

0.00  

14.80 26-Apr-49 

13.55 

13.38 

0.01  

12.98 27-Mar-50 

13.60 

13.29 

0.07  

 


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Treasury Bills 

The T-bills market opened the week on a positive note as trading activities resumed on selected bills within the OMO and NTB yield curve. Investors continued to show interest for march 2021 OMO bills which traded between 9.40% -9.45% and also the June 2021 NTB which traded around 8.90%. Offers on special T-bills were strangely scarce with the few offers shown in the market at 8.70%, although this was shunned by real buyers who demanded for rates above 9.00%.  

  

We expect the market to coast around this level during tomorrow's trading session with some cherry-picking on selected bills offered at attractive rates. 

 

 

Benchmark OMO Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NGOMOB 0 09/07/21 

11.00 

1.50 

0.00  

NGOMOB 0 10/19/21 

11.00 

3.00 

0.00  

NGOMOB 0 11/02/21 

12.00 

2.00 

0.00  

NGOMOB 0 12/07/21 

12.00 

2.50 

0.00  

NGOMOB 0 01/11/22 

12.50 

2.50 

0.00  

NGOMOB 0 02/01/22 

12.50 

2.50 

0.00  

NGOMOB 0 03/01/22 

12.50 

3.50 

0.00  

 

 

 

 

Benchmark NT-Bills 

Description 

Bid (%) 

Offer (%) 

Day Change (%) 

NIGTB 0 05/13/21 

8.00 

1.50 

0.00  

NIGTB 0 06/10/21 

9.00 

1.50 

0.00  

NIGTB 0 07/01/21 

10.00 

2.00 

0.00  

NIGTB 0 08/26/21 

10.00 

2.00 

0.00  

NIGTB 0 09/09/21 

10.00 

2.00 

0.00  

NIGTB 0 10/14/21 

10.00 

2.50 

0.00  

NIGTB 0 11/11/21 

11.00 

2.50 

0.00  

NIGTB 0 01/13/22 

11.00 

3.00 

0.00  

NIGTB 0 02/10/22 

11.00 

3.00 

0.00  

NIGTB 0 03/01/22 

8.00 

1.50 

0.00  

 


Money Markets 

System Liquidity opened the new week at N75.64Bn positive as more banks were able to stay out of the SLF and REPO window. However, the improvement in market liquidity didn't cause any significant change in funding rates since the larger part of the liquidity remained skewed in the hands of few banks. Thus, OBB and OVN closed the day at 18.50% and 19.00% respectively, a 25bps deduction from Friday's closing. 

 

We expect funding rates to remain stable at these levels tomorrow as we do not anticipate any significant outflows to drive rates northwards. 


Money Market Rates 


Current (%) 

Previous (%) 

Open Buy Back (OBB) 

18.50 

18.75 

Overnight (O/N) 

19.00 

19.25 

 


FX Market  

The FX space opened the week amidst poor supply, as traded volumes dropped by 46% from the previous week’s close. The Naira depreciated by N0.67k to close at N411.67/$, with the bided range widening by an additional N5.22k.


At the parallel market, the Naira strengthened by N1.00k at the cash and transfer market as the FX supply drought continues to put pressure in that space.


FX Market 

 

Current (N/$) 

Previous (N/$) 

CBN SMIS 

380.69 

380.69 

I&E FX Window 

411.67 

411.00 

Cash Market 

497.00 

496.00 

Transfer Market 

513.00 

512.00 

 

Eurobonds: 

The NIGERIA Sovereigns opened the new week on a quiet note, with little volumes passing through during the session despite oil price pushing $75pb. Consequently, the Nigerian sovereign benchmark curve expanded marginally by c.4bps from Friday's closing. 

 

For the Nigeria Corporates, it was a rather quiet session as yields on most of the tracked papers remained stable during the trading session. We continue to see some slight selling activity on the ECOTRA 26s and ZENITH 22s moving yields upwards while we saw some demand for the ETINL 24s and ETINL 31s papers with the latter compressing by c.3bps D/D on the bid.


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