Calm Day in the Bonds Market, as Market Demand Shifts to Head of the Curve

Proshare

Saturday, July 04, 2020 / 07:47 AM / By Zedcrest Capital / Header Image Credit: Fortune


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The bonds market traded on a somber note as the downward trajectory in yield slowed especially at the tail of the curve witnessing a bit of resistance from the bulls. We saw few client-driven demands at the short-end of the curve, the 2023s papers in particular which settled around 4.85% for most of the transactions sealed. However, most of the other benchmark papers stayed quiet for a larger part of the trading session with few volumes consummated while yields compressed slightly by an average of c.2bps D/D.

We expect market to open on a tepid note next week as local investors continue to cherry-pick on few bonds offered at levels betters than market.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

4.38

2.99

(0.02)

 

16.39 27-Jan-22

4.44

3.11

(0.02)

 

12.75 27-Apr-23

5.89

4.00

(0.04)

 

14.20 14-Mar-24

6.07

5.27

0.13

 

13.53 23-Mar-25

6.96

5.08

0.00

 

12.50 22-Jan-26

7.76

6.89

0.00

 

16.29 17-Mar-27

8.60

7.89

0.00

 

13.98 23-Feb-28

8.70

8.20

0.00

 

14.55 26-Apr-29

8.76

8.23

(0.27)

 

12.15 18-Jul-34

10.12

9.65

0.00

 

12.40 18-Mar-36

10.14

9.87

0.00

 

16.2499 18-Apr-37

10.12

9.80

0.00

 

14.80 26-Apr-49

10.97

10.75

0.00

 

 

Treasury Bills

At the OMO space today, we saw attention shifts to the newly issued bill 08th June paper which saw most of the market action at the early hours with trades settling around 5.80% levels. However, by mid-day we saw demand dwindled as CRR debit caused local players to reappraise and reduce their buying's consequently offers were force improve their offers by c.25bps to match the few bids left. We also witness slight interest in the 13th August bill albeit no trade as the bears and bulls stayed far apart making it difficult to match trade. 

The NTB space opened and stayed quiet for most of the trading session with few offers at the belly of the curve at 1.75% level although we saw slightly improved offers on the shorter-dated bills albeit in retail sizes.

We expect the markets to open the new week on a bearish note amidst the squeezed system liquidity.

  

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 8/13/2020

4.00

1.20

0.00

NGOMO 9/3/2020

5.50

1.20

0.50

NGOMO 10/1/2020

7.00

1.20

0.50

NGOMO 11/03/2020

7.00

1.20

0.25

NGOMO 12/01/2020

6.70

1.20

(0.05)

NGOMO 02/02/2021

7.50

1.20

0.50

NGOMOB 0 03/02/21

7.50

1.20

0.50

NGOMOB 0 03/02/21

7.50

1.20

0.50

NGOMOB 0 05/11/21

7.00

1.20

0.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

3.50

0.10

0.50

NIGTB 11/12/2020

3.50

0.10

0.00

NIGTB 01/14/2021

3.50

0.10

0.00

NIGTB 02/11/2021

4.00

0.10

0.00

NIGTB 04/29/2021

4.00

0.10

0.00

NIGTB 05/13/21

4.00

0.10

0.00

NIGTB 06/10/21

4.00

0.10

0.00

 


Money Markets

Money Market Rates jumped by c.1930bps on the average in today's session as the market reeled from a CRR debit by the Apex Bank. System liquidity opened c.N433Bn positive but this offered no reprieve as banks' pressures funding was further compounded by their inability to access the SLF window on a Retail FX funding day consequently OBB and OVN rates closed the week higher at 21.50% and 23.50% respectively. 

We expect rates to remain tight opening next week but slightly lower since banks have the option of the SLF window to fund their normal day-to-day needs.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

21.50

2.80

Overnight (O/N)

23.50

3.60

 

FX Market

Most of the FX market segment remained largely unchanged as market activities continue to dwindle in FX space due to the shortage in supply. However, we saw the cash market depreciate slightly by 0.30k closing the day at 458.30/$.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.00

386.00

Cash Market

458.30

458.00

Transfer Market

461.00

461.00

 

Eurobonds

The NGERIA Sovereign tickers traded on a muted note, as calm was seen through the curve. This lack of activity was caused by the Independence's Day Holiday witnessed in the U.S. However we saw more aggressive bids across the benchmark curve from the few available market participants with yields expanding by an average of c.6bps to close the week.

The NGERIA Corps, also played the same side with the sovereign i.e. very calm trading session amongst the few tracked papers with a slight uptick in yields for the ZEN 22s and UBA 22s which expanded by c.1bps on both papers.

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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