Anchoria Fixed Income Monitor: T-bills Stop Rates Increase First Time in 3 Months


Monday, May 18, 2020 / 4:35 PM / By Anchoria AM Research / Header Image Credit: Shutterstock


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Money Market

The average money market rate fell significantly last week by 4.79% to settle at 3.09% from 7.88% in the previous week. This is attributable to the inflow from OMO maturities of N209.05 billion and NTB Maturity of N38.00 billion during the week.


Notable outflows for the week included weekly FX wholesale SMIS of $210mn and NTB auction of N142.76bn. The CBN declared OMO auction held during the week No Sale.


We expect the system liquidity to be slightly buoyant with N17.87 billion FGN Bond coupon payments expected during the week.


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Forex: USD/NGN

During the week the foreign reserve rose by 2.87% to $34.44 billion due to the inflow of $3.4 billion Emergency Loan from IMF. In light of this, the I&E FX window rose by 0.32% to close at N386.00/$ while the CBN official rate remained stable at N361.00/$.


Despite the inflow from IMF, there is still volatility in the currency market as Foreign Investors and Importers continually increase their demand for the greenback.


We expect continuous fluctuations in the rates in the foreign market as the pandemic continues to pose a threat on the economy.


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The secondary sovereign Bond market closed bearish last week as the average yield rose by 33bps to close at 10.55% compared to 10.22% in the previous week. The highest yield increase was witnessed in the MAR-2024 issuance which rose by 122bps to close at 9.61% while the highest yield decline was witnessed in the MAR-2027, fell by 21bps to close at 10.97% from 11.18%.


The Sovereign Eurobond market closed on strongly bullish as the average yield fell by 302bps to close at 7.38% compared to 10.40% the previous week. This can be traced to the highest increase in Crude Oil Price since March and the increase in the country's external reserve while the Corporate Eurobond market closed bullish as the average yield fell by 498bps to close at 8.72% compared to 13.70% the previous week.


We expect widening in bond yield as investors anticipate the upcoming Bond auction worth N60.00 billion by the DMO.

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Treasury Bills

The T-bills secondary market closed on a bullish note last week as the average yield fell by 38bps to close at 2.28% compared to 2.66% the previous week due to the trading activity in the market following the auction held during the week. In the same vein, OMO bills fell by 163bps to close at 8.45% compared to 10.08% the previous week.


At the T-bills auctions, the DMO allotted 142.76 billion worth of bills. 91 day – N19.78 billion, N40.09 billion for 182-day and N82.89 billion for the 364 day. The stop rates closed at 2.50%, 2.85% and 3.84% respectively.

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Brent oil rose by 17.13% to close at $32.50 compared to $30.97 last week while WTI rose by 18.96% to close at $29.43. The increase is due to the growing demand for fuel, as nations around the globe eased travel restrictions, which they had imposed to limit the spread of the COVID-19 pandemic. The reopening of the economies, had a beneficial effect on the oil prices.

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Another contributory factor in oil price rise is the surprise crude inventory drawn by the Energy Information Administration. In gasoline, the EIA reported an inventory draw of 3.5 million barrels while distillate fuels, the EIA reported an inventory rise of 3.5 million barrels for last week.


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