CBN Cuts OMO Rates by 37bps Staying True to Their Stance

Proshare

Friday, October 23, 2020 / 08:14 PM / By Zedcrest Capital / Header Image Credit: Money Control


Below are highlights of trading activities in the fixed income and forex market on October 22, 2020

 

FGN Bonds

The FGN bonds market continued to trade on a lethargic note albeit still bullish with yields opening lower across the benchmark curve, as demand from lost bids in the previous day's bond auction flowed into the secondary market. Bid/Offer spread tightened with improved bids across the curve, but again, the market opened uncertain of where levels would eventually settle. The 2049s and 2050s maturities opened the day 6.80%/6.38% but with the market net-long ahead of the auction, it didn't take long before supply from dealers flooded the markets, causing a slight pull-back from buyers, consequently causing it to close the day at 6.95%/6.80%.

 

We expect the market to remain volatile for the week's final trading session, with offers expected to improve some more as bondholders look to sell-off old stock at these lower levels.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

2.15

1.08

(3.40)

 

12.75 27-Apr-23

2.76

0.65

(3.45)

 

14.20 14-Mar-24

2.69

0.95

(3.26)

 

13.53 23-Mar-25

3.03

1.52

(3.95)

 

12.50 22-Jan-26

3.54

2.63

(4.24)

 

16.29 17-Mar-27

4.22

2.38

(5.63)

 

13.98 23-Feb-28

4.33

3.19

(4.16)

 

14.55 26-Apr-29

4.33

3.47

(4.67)

 

12.15 18-Jul-34

5.54

4.68

(3.71)

 

12.40 18-Mar-36

5.50

4.56

(4.02)

 

16.2499 18-Apr-37

5.53

4.70

(5.84)

 

14.80 26-Apr-49

7.00

6.75

(1.51)

 

 

Treasury Bills

The T-bills market had a quieter session today, as market participants shifted their focus to the supply from the OMO auction floated by the CBN. Rates continued to move lower in the secondary market for most of the session, with little volume s passed.

At the OMO bill auction, the CBN issued a total of N100BN while cutting the stop rates by c.37bps on the average across the three tenors on offer. Demand remained skewed towards the long-dated paper offered (362-day) with a bid-to-cover ratio of c.2.99X, as foreign portfolio investors hunt for the highest yield available.

We expect toned-down action in the market to close out the week, as the little supply from the auction flows to the secondary markets.

 

OMO AUCTION RESULT

 OMO - 22 Oct 2020
 

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

138 days

3.740

10.00

28.26

10.00

4.1000

-0.0036

180 days

6.800

10.00

46.76

10.00

7.1000

-0.0030

362 days

8.000

80.00

239.41

80.00

8.4500

-0.0045

 

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00

NGOMO 01/05/2021

1.00

0.01

0.00

NGOMO 02/02/2021

1.00

0.01

0.00

NGOMOB 0 03/02/21

2.00

0.01

0.00

NGOMOB 0 05/11/21

2.00

0.01

0.00

NGOMOB 0 08/10/21

2.00

0.01

0.00

NGOMOB 0 09/07/21

2.00

0.01

0.00

NGOMO 11/03/2020

1.00

0.01

0.00

NGOMO 12/01/2020

1.00

0.75

0.00



Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

NIGTB 02/11/2021

2.00

0.01

0.00

NIGTB 04/29/2021

2.00

0.01

0.00

NIGTB 05/13/21

2.00

0.01

0.00

NIGTB 06/10/21

2.00

0.01

0.00

NIGTB 07/01/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 08/26/21

2.00

0.01

0.00

NIGTB 09/09/21

2.00

0.01

0.00

NIGTB 11/12/2020

1.00

0.01

0.00

NIGTB 01/14/2021

1.00

0.01

0.00

 


Money Markets

System liquidity remained robust by inflows from OMO maturities (c.N285BN) flowed into the already flooded market. Interbank rates remained stable as the OMO sale of N100BN did little to stem the excess liquidity.


We don't expect any significant change in interbank rates tomorrow despite the bond auction funding and other debits expected to hit the market.


 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

0.67

0.50

Overnight (O/N)

1.33

0.80

 


FX Market

The IEFX Window traded on a more active note today, with traded volumes up by a whopping 1000% ($72.33mio trading) D/D waking from the civil unrest in Nigeria. Despite this increased volume, rates traded in a wider band of N11k with its rate depreciating by 71K. Other market segments also remained unchanged on the day.



FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

386.00

385.29

Cash Market

459.00

459.00

Transfer Market

473.00

473.00

 

 

Eurobonds

It was a pretty calm session for SSA Eurobonds despite general weak sentiments persisting for the sovereign papers. The NIGERIA Sovereign curve weakened again by another c.11bps as offshore investors continue to stay in risk-off mode. 

 

The NIGERIA Corporates had a relatively quiet session as well, with gains on the ACCESS 2021s (+5bps) singling it out as the star of the trading session.



Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

 Proshare Nigeria Pvt. Ltd.

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