Bond Auction Stop Rates Drop to 3-Year Lows at Monthly Auction

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Thursday, November 21, 2019 / 11:26 AM / By Zedcrest Capital / Header Image Credit: Annuity1


Below are highlights from the fixed income and forex market on October 20, 2019

 

FGN Bonds

The Bond market traded on a muted note, with a bullish bias, as market participants focused on the monthly FGN Bond auction. We observed buy interests across the curve, with the 2049s once again the most actively traded security with the highest yield on offer. Yields dropped by an average of c.14bps across the benchmark bond curve. 

At the Bond auction, a total of N157.93bn was sold, with as rates dropped across all the tenors on offer. The 2023s and 2029s dropped by c.200bps and 250bps respectively to 3-year lows while the 30-year bond dropped by c121bps to 13.39%, the lowest since its initial opening in April 2019. Demand remained skewed to the 30-year, with a bid-to-cover ratio of 2.3X.

We expect a bullish reaction in the secondary markets as investors look to fill bids lost at the auction. OMO maturities of c.N350bn should also support demand pressure for bonds as locals remain locked out of the OMO auction.

 

FGN Bonds Auction Results - 20 November 2019

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn) 

Apr-23

12.00

50.00

43.05

19.87

Apr-29

12.93

50.00

94.21

61.70

Apr-49

13.39

50.00

115.09

76.36

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

12.00

11.30

(0.27)

16.39 27-Jan-22

12.08

11.72

(0.05)

12.75 27-Apr-23

12.09

11.83

(0.03)

14.20 14-Mar-24

12.20

11.80

0.03

13.53 23-Mar-25

12.09

11.72

0.02

12.50 22-Jan-26

12.10

11.98

(0.10)

16.29 17-Mar-27

12.50

11.72

(0.15)

13.98 23-Feb-28

12.83

12.71

(0.06)

12.15 18-Jul-34

13.08

12.71

0.05

12.40 18-Mar-36

12.07

12.71

(1.03)

16.2499 18-Apr-37

13.10

12.72

(0.01)

14.80 26-Apr-49

13.36

13.20

(0.08)

Source: Zedcrest Dealing Desk

 

Treasury Bills

The Treasury Bills Market traded quietly as market players looked to sell-off short-dated securities to offset funding pressures. The NTB market sparked some glimmer of hope, in an otherwise dull market, with sustained demand interest from local investors, but showed reluctance to invest at these low levels.  Yields increased by an average of c.18bps across the benchmark Treasury Bills curve.

With OMO maturities of c.N350bn expected to flow into the system, we anticipate a slightly active market as use maturities to ease funding pressures.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 5-Dec-19

13.00

12.00

0.00

NGOMO 2-Jan-20

9.75

2.00

0.75

NIGTB 2-Jan-20

13.15

11.00

(0.05)

NGOMO 6-Feb-20

13.15

11.00

(0.05)

NGOMO 19-Mar-20

12.75

11.50

0.00

NIGTB 2-Apr-20

10.00

5.00

1.00

NGOMO 2-Apr-20

13.00

11.75

0.00

NGOMO 14-May-20

13.00

11.60

0.00

NGOMO 4-Jun-20

13.00

11.25

0.00

NIGTB 2-Jul-20

10.00

7.00

0.75

NGOMO 2-Jul-20

13.00

12.00

0.00

NGOMO 13-Aug-20

13.15

12.60

0.00

NGOMO 3-Sep-20

13.15

12.65

0.05

NIGTB 1-Oct-20

10.00

4.00

0.20

NGOMO 1-Oct-20

13.20

12.00

0.05

Source: Zedcrest Dealing Desk

 

Money Market

System liquidity remained tight, opening at c.N46.27 positive. Rates at the interbank market dropped further by an average of c.90bps, as OBB and OVN rates closed at 14.36% and 15.21% respectively as the SLF window provided support for funding banks. 

We anticipate a drop in rates tomorrow, as OMO maturities of c.N350bn impacts system liquidity positively.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.36

15.57

Overnight (O/N)

15.21

16.50

Source: FMDQ, Zedcrest

 

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.95/$ (spot) and N358.51/$ (SMIS). At the I&E FX window, a total of $233.65bn (down 26.09% d-o-d) was traded in 305 deals, with most trades executed between N360.00/$ - N363.00/$. The NAFEX closing rate appreciated by 28k to close at N362.52/$ from N362.80/$ previously. 

At the parallel market segment, the cash and transfer rates both remained unchanged to close N358.00/$ and N362.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.51

358.51

I&E FX Window

362.52

362.80

Cash Market

358.00

358.00

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The bearish bias continued in today's NGERIA Sovereigns, as yields on the sovereign curve further expanded from yesterday's session. Yields increased by an average of c.5bps across the sovereign yield curve. 

It was a quiet session for the NGERIA Corps tickers, with most tracked papers unchanged from the previous day's levels. Yields on the SEPLLN 2023s expanded by 3bps, despite a rebound in oil prices (2.18% increase d-o-d).

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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