CBN Maintains a Dovish Stance Towards Market Keeping MPR Stable at the First MPC Meeting of the Year

Proshare

Wednesday, January 27, 2021 / 8:24 AM / By Zedcrest Capital / Header Image Credit: Arise News


Proshare Nigeria Pvt. Ltd.

 

FGN Bonds 

The FGN bond market traded on a very calm note, although with a bearish tilt as market participants anticipated the outcome of the MPC meeting that was concluded today. We saw local investors maintain their demand bias for short duration bonds, with emphasis on the 2024s and 2026s papers, which traded around 6.10% - 6.30% and 7.30% - 7.40%, respectively. We also saw little action on the 2045 bonds, with trades executed around 9.80% - 9.90%. Consequently, yields expanded by an additional c.12bps D/D on the average across the benchmark curve.

 

We expect some buying interest to resume tomorrow in reaction to the CBN's dovish stance at today's MPC meeting.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

4.98

1.03

0.00

 

12.75 27-Apr-23

6.43

4.67

0.00

 

14.20 14-Mar-24

6.96

5.70

0.31

 

13.53 23-Mar-25

7.04

5.50

0.00

 

12.50 22-Jan-26

7.61

6.42

0.00

 

16.29 17-Mar-27

8.61

7.90

0.00

 

13.98 23-Feb-28

8.78

7.81

0.00

 

14.55 26-Apr-29

8.97

8.00

0.14

 

12.15 18-Jul-34

10.21

9.25

0.12

 

12.50 27-Mar-35

10.26

9.10

0.18

 

12.40 18-Mar-36

10.29

9.18

0.23

 

16.2499 18-Apr-37

10.34

9.30

0.33

 

9.80 24-Jul-45

10.31

9.69

0.18

 

14.80 26-Apr-49

10.47

10.00

0.24

 

12.98 27-Mar-50

10.54

9.92

0.28

 

 

Treasury Bills

The Treasury Bills market continued on a bearish run despite the inflows from OMO maturities credited into the system today. Traders remained firmly offered on short and mid-dated bills at low yields, which was shunned by real buyers who preferred the longest-dated bills offered at attractive levels. The January 2021 OMO bills remained the most sought-after T-bills, with the bulk of market trades executed around 3.40%- 3.70% levels during the trading session.

 

We expect market attention to turn towards the PMA NTB auction scheduled for tomorrow while market participants continue to cherry-pick on selected bills offered at attractive levels. 

 

 

Primary Market Auction Expectation

NTB - 27 January 2020

 

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

10.00

0.400 - 0.800

0.5000

182 days

20.00

0.750 - 1.200

1.0000

364 days

44.84

1.350 - 1.750

1.5000

 

 


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Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 02/02/21

9.00

0.03

0.00

NGOMOB 0 03/02/21

9.00

0.03

0.00

NGOMOB 0 05/11/21

9.00

0.04

0.00

NGOMOB 0 06/08/21

9.00

0.04

0.00

NGOMOB 0 08/10/21

9.00

0.04

0.00

NGOMOB 0 09/07/21

9.00

0.04

0.00

NGOMOB 0 10/19/21

9.00

0.05

0.00

NGOMOB 0 11/02/21

9.00

0.05

0.00

NGOMOB 0 12/07/21

9.00

0.05

0.00

 


Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 01/14/21

9.00

0.03

0.00

NIGTB 0 02/11/21

9.00

0.03

0.00

NIGTB 0 03/11/21

9.00

0.03

0.00

NIGTB 0 04/29/21

9.00

0.04

0.00

NIGTB 0 05/13/21

9.00

0.04

0.00

NIGTB 0 06/10/21

9.00

0.04

0.00

NIGTB 0 07/01/21

9.00

0.04

0.00

NIGTB 0 08/26/21

9.00

0.04

0.00

NIGTB 0 09/09/21

9.00

0.05

0.00

NIGTB 0 10/14/21

9.00

0.05

0.00

NIGTB  0 11/11/21

9.00

0.05

0.00

NIGTB 0 01/14/21

9.00

0.03

0.00

NIGTB 0 02/11/21

9.00

0.03

0.00

 

Money Markets

System liquidity opened today with an estimated figure of +N250bn, as money market rates recoiled by an additional c. N113bps on average due to a reduced funding pressure at the market today. Consequently, OBB and OVN rates closed the day lower at 4.50% and 5.25%, respectively.

 

We expect funding rates to oscillate in tandem with the available system liquidity in the short term.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

4.50

5.50

Overnight (O/N)

5.25

6.50

 

 

FX Market

Volumes traded in the I&E FX window went up by over 172% with over $108.34mio changing hands D/D, while the Naira appreciated by N0.50k to close at N394.00/$, with intraday rates ranging within a low of N390.00/$ and a high of N396.00/$. Likened to the I&EFX segments, the Naira also appreciated at the parallel market by N1.50K boosted by the FX supply from weekly collections by the BDCs from the Apex bank.

 

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

394.00

394.50

Cash Market

476.00

476.50

Transfer Market

487.00

488.00

 

 

Eurobonds

It was a typical bearish session in the NIGERIA Sovereigns, with some profit-taking action seen, especially on the mid-and long-tenor papers causing yields to expand slightly by c.3bps on the average across the sovereign curve.  At the SSA space, the Angola 2025s remained weak for the second consecutive day as sellers continue to improve offers in another profit-taking driven session for the paper.

 

In contrast to the Sovereign papers, the NIGERIA Corps papers were bullish although still maintaining a tranquil trading session with significant movement seen on the Zenith 2022s paper, which declined by -c.40bps D/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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