Bond Yields Resume Rally as DMO Plans To Offer N60Bn in April FGN Bond Auction

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Wednesday, April 15, 2020 / 10:03 PM / Zedcrest Capital / Header Image Credit: China Daily



Below are highlights of trading activities in the fixed income and forex market on April 15, 2020 

 

FGN Bonds

The Bond Market shrugged off the previous session's losses, as yields compressed off renewed demand. Demand from local clients was noted at the short- to mid-end of the benchmark curve, most especially the 2026s and 2028s maturities. The DMO also released its offer circular for the monthly bond auction, offering N60bn in total across three tenors. Consequently, yields compressed by c.9bps on the average across the benchmark curve.

 

With the DMO maintaining course with its borrowing plans, we expect some bearish tension to ease off in the market. With the Dangote Cement bond issue looking to mop up at least N100bn in local demand, we expect a slowdown in demand leading up to next week's auction.



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Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

5.90

5.51

(0.13)

 

16.39 27-Jan-22

6.81

6.13

(0.21)

 

12.75 27-Apr-23

9.82

8.94

(0.04)

 

14.20 14-Mar-24

10.23

8.94

(0.06)

 

13.53 23-Mar-25

11.99

9.63

(0.02)

 

12.50 22-Jan-26

11.99

9.51

(0.59)

 

16.29 17-Mar-27

12.05

11.85

(0.29)

 

13.98 23-Feb-28

12.23

11.88

(0.03)

 

14.55 26-Apr-29

12.28

11.97

0.01

 

12.15 18-Jul-34

12.42

12.10

0.00

 

12.40 18-Mar-36

12.47

11.98

0.07

 

16.2499 18-Apr-37

12.50

12.22

0.10

 

14.80 26-Apr-49

12.65

12.53

(0.01)

 

 

Treasury Bills

Demand for OMO bills slowed in today's session despite improved system liquidity. However, rates continued to drop on the long-dated OMO maturities with offers dropping below the 11.00% mark. Rates closed lower by c.8bps on the average on the benchmark OMO curve.

 

NTBs traded on a quiet note, as investors focused on the PMA. At the PMA successfully rolled over c.N89.99bn while dropping stop rates by an average of c.34bps across the three tenors on offer. Demand remained heavy at the auction, with an average bid-to-cover ratio of c.2.68X across all tenors on offer.


We expect market dynamics to remain stable in tomorrow's session as liquidity supports demand.


Primary Market Auction Results

NTB  - 15 April 2020

Tenor

Offer (N'bn)

Subscription (N'bn)

Sale (N'bn)

Stop Rate (%)

91 days

5.85

13.10

5.85

1.93

182 days

3.50

12.56

3.50

2.74

364 days

49.14

109.39

49.14

4.00

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 5/14/2020

11.25

9.50

0.00

NGOM 6/4/2020

10.75

6.00

(0.50)

NGOM 7/2/2020

11.25

8.00

0.00

NGOM 8/13/2020

11.25

9.75

0.00

NGOM 9/3/2020

11.25

10.35

0.00

NGOM 10/1/2020

11.50

10.50

0.00

NGOM 11/03/2020

11.50

10.00

0.00

NGOM 12/01/2020

12.00

10.50

0.00

NGOM 01/05/2021

12.25

11.00

0.00

NGOM 02/02/2021

12.00

10.90

(0.50)

NGOM 03/02/21

12.00

10.00

(0.50)

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

2.10

1.00

0.00

NIGTB 1-Oct-20

3.00

1.00

(0.10)

NIGTB 12-Nov-20

3.65

1.00

0.15

NIGTB 14-Jan-21

3.85

1.00

0.10

NIGTB 11-Feb-21

4.00

1.00

0.00

                                                                         



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Money Markets

Money Market Rates dropped further today, as some refunds hit local banks and pushing system liquidity to open at c.N629.33bn. OBB and OVN rates dropped to close at 2.00% and 2.42% respectively.


Rates are expected to remain stable for the rest of the week, as OMO maturities are expected to hit system tomorrow.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.00

2.33

Overnight (O/N)

2.42

2.83



FX Market

Traded volumes in the I&E window remain poor, as only c.$38.61million changed hands in today’s session. Naira recovered a bit, to close at N385.63/$ at the window while the CBN rates remained unchanged again.


At the parallel market, a lack of supply continued to weaken the Naira, as sellers dictate the tune. Cash rate remained stable to close at N415.00/$ while Transfer rates depreciated by of N2.00k to close at N432.00/$ respectively.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

 361.00

 361.00

CBN SMIS

 380.69

 380.69

I&E FX Window

385.63

 384.83

Cash Market

 414.00

 414.00

Transfer Market

 432.00

 430.00

 

Eurobonds

The NGERIA Sovereigns seemed to have lost their charm, as yields rose across the sovereign papers off the back of falling crude oil prices. Yields expanded by c.37bps on the average across the benchmark curve, with the market fully offered with no bids seen.


The NGERIA Corps also traded on a weaker note as demand dropped across most tracked tickers, save for the FIDBAN 2022s which rallied c.11bps.


 

 Proshare Nigeria Pvt. Ltd.




Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.

 Proshare Nigeria Pvt. Ltd.

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