Bond Yields Trend Higher as CBN Floats Further OMO Auction

Proshare

Saturday, August 31, 2019 / 06:00 AM / By Zedcrest Capital / Header Image Credit: Money Control

 

At the Auction today, interests remained focused on the 363-day bill, where the CBN sold N216.75bn at c.50bps above the clearing rate in the prior session. Rates on the short and mid tenors were however unchanged from their previous levels, with only c.N5.37bn sold on those.

 

Below are the highlights of trading activities in the fixed income and forex market today.

 

Bonds

The FGN Bond market traded on slightly bearish note with yields trending higher by c.11bps, as market players reacted to a renewed OMO floatation by the CBN.

 

We expect yields to remain pressured going into the new week, due to the higher OMO clearing rates by the CBN at the auction today, and the elevated maturity profile (c.N1.33Trillion) expected to be rolled over by the CBN in the new month.

 


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.28

13.69

0.12

16.39 27-Jan-22

14.34

13.94

0.15

12.75 27-Apr-23

14.30

14.00

0.13

14.20 14-Mar-24

14.20

13.89

0.13

13.53 23-Mar-25

14.21

13.85

0.02

12.50 22-Jan-26

14.30

14.02

0.20

16.29 17-Mar-27

14.20

14.12

0.00

13.98 23-Feb-28

14.30

14.12

0.10

12.15 18-Jul-34

14.65

14.36

0.20

12.40 18-Mar-36

14.67

14.40

0.12

16.2499 18-Apr-37

14.64

14.36

0.08

14.80 26-Apr-49

14.67

14.50

0.12


Source: Zedcrest Dealing Desk
 

 

 

Treasury Bills

The T-bills market traded on a relatively flat note, with only slightly buying interest observed on the short end of the curve (Sep - Jan). The Mid to long end of the curve remained quiet, as market players awaited results from the CBN's OMO auction.

We expect yields to remain pressured in the coming week, due to the higher clearing rate on the 1yr bill and with system liquidity being relatively squeezed by the CBN's OMO and FX interventions.

 

 


OMO - 30 August 2019

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

90 day

11.59

100.00

5.39

2.89

188 day

11.79

100.00

2.99

2.48

363 day

12.50

200.00

228.75

216.75

Source: CBN

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

13.35

12.75

0.00

3-Oct-19

13.10

12.75

(0.10)

14-Nov-19

13.00

12.50

(0.35)

5-Dec-19

13.00

12.35

(0.35)

2-Jan-20

13.50

13.00

(0.25)

6-Feb-20

13.40

12.75

0.00

19-Mar-20

13.80

12.80

0.00

2-Apr-20

13.70

13.00

0.00

14-May-20

13.65

13.00

(0.05)

04-Jun-20

13.75

12.80

0.00

02-Jul-20

13.70

12.70

(0.05)

13-Aug-20

13.75

12.20

0.00

Source: Zedcrest Dealing Desk

 

 

Money Market

Rates in the money market remained relatively stable as system liquidity was sustained in positive territory at c.N185bn est. The OBB and OVN rates consequently ended the session at 9.29% and 10.50% respectively.

 

We expect rates to trend slightly higher opening the new week, as banks fund for another round of FX interventions (wholesale) by the CBN.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.29

6.29

Overnight (O/N)

10.50

7.36

Source: FMDQ, Zedcrest

 

 

 

FX Market

At the interbank, the Naira/USD spot and SMIS rates remained stable at N307.00/$ and N358.04/$. The Naira depreciated at the I&E window by 32k to close at N362.93/$. At the parallel market, the cash and transfer rates remained stable at N359.00/$ and N363.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

358.04

358.04

I&E FX Window

362.93

362.61

Cash Market

359.00

359.00

Transfer Market

363.00

363.00

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

There was renewed demand interest seen in the NGERIA Sovereigns, with yields declining by c.9bps on the day. Yields however closed 30bps higher M/M, due to the escalated trade tensions during the month.

 

In the NGERIA corps, we witnessed some buying interest in the ZENITH 22s, whilst traders were better sellers of the SEPLLN 23s.

 

Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.


 

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Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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