CBN drops OMO rate by another 130bps in the latest OMO auction

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Friday, June 05, 2020 / 8:58 AM / By Zedcrest Capital / Header Image Credit: Investopedia


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The Bond Market traded on a tepid note, with a bullish bias in today's session. Interests remained skewed towards the long end of the curve, especially the 2035s which traded c.40bps above its peers at 11.40%. However, trading activities didn't seem to move yields aggressively which compressed slightly by an average of c.1bps.

We expect to see a bit of lethargy in tomorrow's market, as interbank funding needs from the Retail FX auction dampen appetite.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

7.10

4.84

0.23

 

16.39 27-Jan-22

7.75

4.80

(0.04)

 

12.75 27-Apr-23

9.12

8.37

0.03

 

14.20 14-Mar-24

9.09

7.94

0.00

 

13.53 23-Mar-25

8.60

7.47

(0.01)

 

12.50 22-Jan-26

10.12

9.50

0.00

 

16.29 17-Mar-27

11.14

10.06

0.09

 

13.98 23-Feb-28

10.86

10.42

(0.17)

 

14.55 26-Apr-29

11.12

10.35

(0.01)

 

12.15 18-Jul-34

11.30

11.02

(0.05)

 

12.40 18-Mar-36

11.30

10.98

(0.06)

 

16.2499 18-Apr-37

11.30

11.06

(0.04)

 

14.80 26-Apr-49

12.42

12.16

(0.05)

 

 

Treasury Bills

It was very active day in the OMO space as the market showed healthy appetite for bills today. Interestingly, the huge demand from local banks was supported by healthy supply from offshore players looking to cycle out of current holdings and recreate at the OMO auction. The September - November papers traded within the range of 3.90%- 4.60% while January bills traded at an average of 5.70%. We also saw a bit of axes for the 13th May bill at around 5.85% although not so much happened around this level. By close of day, yields compressed by an average of c.11bps across OMO maturities. At the OMO auction, the apex bank sold a total of c. N70bn across all the tenors on offer, with stop rates dropping further by an average of c.130bps from the last auction. 

In contrast, activities were muted at the NTB space with very few trades passing through the market.

We expect market demand to weaken in tomorrow's market given that system liquidity will be less robust to support trading activities. 

 

OMO Auction  Results

OMO  - 04 June 2020

Tenor

Rate (%)

Offer (₦'bn)

Sub (₦'bn)

Sale (₦'bn)

Previous Rate (%)

Changes

82-days

7.00

20.00

46.00

20.00

4.9500

2.0500

180-days

8.75

20.00

51.70

20.00

7.7900

0.9600

348-days

9.90

30.00

200.96

30.00

8.9900

0.9100

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 6/4/2020

3.00

0.10

(1.00)

NGOM 7/2/2020

7.00

1.50

0.00

NGOM 8/13/2020

7.50

1.50

0.00

NGOM 9/3/2020

7.50

1.50

0.00

NGOM 10/1/2020

8.00

1.50

0.00

NGOM 11/03/2020

8.00

1.50

0.00

NGOM 12/01/2020

8.00

1.50

(0.50)

NGOM 01/05/2021

8.00

1.50

(0.50)

NGOM 02/02/2021

8.00

1.50

1.30

NGOM 03/02/21

6.15

1.50

(0.35)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

3.00

0.10

(1.00)

NIGTB 1-Oct-20

4.00

0.10

(0.50)

NIGTB 12-Nov-20

4.00

0.10

(0.50)

NIGTB 14-Jan-21

4.00

0.10

(1.00)

NIGTB 11-Feb-21

5.00

0.15

0.00

 

Money Markets

System liquidity remained very liquid closing the day at approximately N667.79bn positive. Consequently, OBB and OVN dropped by an average of c.15bps to close the day at 1.90% and 2.50% respectively. 

We expect an upward trend in interbank rate tomorrow, most likely two digits' level due to the bi-weekly FX retail funding and a likelihood of CRR debit by the APEX bank.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.90

2.00

Overnight (O/N)

2.50

2.70

 

FX Market

The Naira depreciated at the I&E FX window, as the supply squeeze continued to affect the general flow of funds. Approximately $25.20m changed hands through this window as most banks remained bided between 383/$ and 387/$.

The cash and transfer rates also depreciated by an average of N2.5k closing the day at N447/$ and N453/$ respectively.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.70

386.33

Cash Market

447.00

445.00

Transfer Market

453.00

450.00

 

Eurobonds

The NGERIA Sovereign tickers retraced as profit taking prevailed in today's session. We noted better offers across the sovereign curve, most especially in the mid and long dated maturities. Consequently, yields expanded by an average of c.7bps across the sovereign yield curve. 

Contrastingly, the NGERIA Corps tickers traded on a bullish note, with yields on the SEPLLN 2023s having the biggest D/D drop of c.19bps, while the ACCESS 2021s also dropped by c.1bps among most tracked papers.
 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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