Bullish Trend Continues for Treasury Bills Ahead of Expected OMO Auction

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Thursday, October 10, 2019   /  08:34 AM  / By Zedcrest Capital / Header Image Credit: Forex Time


The T-bills market was active, with sustained demand across most maturities across the NTBills curve. Yields on short-dated maturities dropped by an average of c.50bps while, yields further dropped by an average of c.25bps at the long-end of the NTBills curve. 

With OMO maturities of c.N347bn expected tomorrow, we expect the CBN to issue an OMO auction to mop-up excess liquidity levels. The jury is still out as to whether the Apex will still restrict non-bank investors from bidding at the next auction, however we expect the stop rates to close lower as demand outweighs current supply at the long-end. We still expect a quiet start to trading tomorrow, with market direction largely dependent on the outcome of the OMO results.

Below are highlights of trading activities in the fixed income and forex market on October 09, 2019.


Bonds

The Bond market traded on an active note, with a bearish sentiments witnessed in the trading session. Trades were mostly active at the mid- (2028s) to long-end (2036s & 2049s) of the curve, as we noted weaker bids in the market for those securities. Yields expanded by c.2bps on the average across the benchmark bond curve.

 

We adopt a cautious approach in the interim, as market participants weigh current yield levels against expected mop-up action by the Central Bank to address buoyant system liquidity levels.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.33

13.54

0.00

16.39 27-Jan-22

14.16

13.74

(0.01)

12.75 27-Apr-23

14.41

14.30

0.04

14.20 14-Mar-24

14.17

13.74

(0.01)

13.53 23-Mar-25

14.24

14.06

0.00

12.50 22-Jan-26

14.34

14.11

0.11

16.29 17-Mar-27

14.25

14.09

(0.02)

13.98 23-Feb-28

14.41

14.25

0.05

12.15 18-Jul-34

14.51

14.35

0.00

12.40 18-Mar-36

14.54

14.35

0.04

16.2499 18-Apr-37

14.63

14.32

0.03

14.80 26-Apr-49

14.69

14.61

0.03


Source: Zedcrest Dealing Desk

 


Treasury Bills

The T-bills market was also active, with sustained demand across most maturities across the NTBills curve. Yields on short-dated maturities dropped by an average of c.50bps while, yields further dropped by an average of c.25bps at the long-end of the NTBills curve.

 

With OMO maturities of c.N347bn expected tomorrow, we expect the CBN to issue an OMO auction to mop-up excess liquidity levels. 

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Nov-19

12.00

10.00

(0.25)

5-Dec-19

11.90

10.00

(0.35)

2-Jan-20

12.00

10.50

(0.60)

6-Feb-20

12.50

11.50

(0.10)

19-Mar-20

12.45

10.50

0.25

2-Apr-20

11.80

11.56

(0.45)

14-May-20

12.40

12.00

0.20

04-Jun-20

13.00

11.50

0.00

02-Jul-20

12.95

12.30

0.20

13-Aug-20

12.70

12.25

(0.05)

3-Sep-20

13.00

12.40

(0.20)

1-Oct-20

12.80

11.50

(0.40)

Source: Zedcrest Dealing Desk

 


Money Market

Money market rates slightly increased from yesterday by an average of c.100bps from yesterday. Market rates continue to trade at low single-digit levels, as the system is still awash with liquidity. OBB and OVN rates closed today at 4.43% and 5.07% respectively, with system liquidity estimated to close at c.N190bn.

 

We expect money market rates to still remain at these levels barring any CBN mop-up.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.43

3.07

Overnight (O/N)

5.07

3.79

Source: FMDQ, Zedcrest


FX Market

At the interbank, the Naira/USD spot rate remained stable at N307.00/$ while the SMIS rates remained stable at N358.13/$. At the I&E window, the closing rate for the Naira further increased by 5k to close the day at N362.50/$.

The cash and transfer rates at the parallel markets also saw no change, closing at N357.80/$ and N362.50/$ respectively.



                             FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

307.00

307.00

CBN SMIS

358.13

358.13

I&E FX Window

362.50

362.45

Cash Market

357.80

357.80

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

Trading activity in the NGERIA Sovereigns remained bearish across the sovereign curve for a second day, despite a 1.79% increase in global oil prices from yesterday. We noted better sellers for the sovereign papers but not much local demand. Yields consequently closed higher by c.4bps on the average across the sovereign curve.

 

We noted improved demand by investors on some NIGERIA Corps papers for the second day running, most notably the SEPLLN 2023s and Zenith 2022s which dipped 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.
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