DMO Releases Revised FGN Bond Issuance Calendar, Raises N142.76Bn At NTB Auction

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Thursday, May 14, 2020 / 9:32 AM / By Zedcrest Capital / Header Image Credit: Toronto Storeys

 

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FGN Bonds

Market participants continued to tread on a light note, as the direction of yields remains unclear. We noted some slight demand on select maturities at the short- (2023s) and mid-end (2028s and 2029s) of the benchmark curve. Bonds at the long-end of the curve (2034s and 2036s) continued to be better offered, but with no willing bids to match. Consequently, yields compressed by c.7bps on the average across the benchmark curve.

 

The DMO released its revised FGN Bonds Issuance Calendar for Q2'20, which will see the DMO raise an additional N105Bn monthly, in line with its revised borrowing plan. While the amount for this month's auction remains unchanged at N60bn, we expect the DMO to take advantage of expected subscription to raise more than offered. We expect the market to react with higher rates in tomorrow's session.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

8.07

4.98

(0.01)

 

16.39 27-Jan-22

9.22

5.40

(0.01)

 

12.75 27-Apr-23

10.72

8.60

0.00

 

14.20 14-Mar-24

10.50

8.44

0.10

 

13.53 23-Mar-25

8.99

8.19

(0.36)

 

12.50 22-Jan-26

10.72

10.05

0.02

 

16.29 17-Mar-27

11.17

10.19

(0.09)

 

13.98 23-Feb-28

11.31

10.73

0.00

 

14.55 26-Apr-29

11.40

11.00

(0.47)

 

12.15 18-Jul-34

11.61

11.15

(0.09)

 

12.40 18-Mar-36

11.76

11.36

0.07

 

16.2499 18-Apr-37

11.94

11.30

0.00

 

14.80 26-Apr-49

12.71

12.48

(0.05)

 

 

Treasury Bills

Rates on NTBs retraced in today's session off the back of expected supply from the primary auction, expanding c.71bps on the average across the benchmark curve. At the NTB PMA, the DMO took advantage of healthy subscription levels to raise N142.76Bn across the three tenors on offer, 4.21X initially offered. Rates for the 91- and 182-day tenors moved higher by c.50bps on the average while the 364-day rates remained unchanged.

 

The improved supply from the primary auction is expected to heat up the secondary market, causing rates to inch even higher. The DMO's aggressive borrowing, in line with its revised borrowing plan, could signal the beginning of an upward trend in NTBs rates.

 

NTB Auction Results - May 14, 2020

Tenor

Stop Rate (%)

Offer (N'bn)

Sub. (N'bn)

Sales (N'bn)

91-day

2.50

4.38

22.33

19.78

182-day

2.85

12.92

41.19

40.09

364-day

3.84

16.54

102.03

82.87

 

 

                           Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 6/4/2020

9.75

6.00

0.00

NGOM 7/2/2020

9.00

5.00

0.00

NGOM 8/13/2020

9.75

6.50

0.00

NGOM 9/3/2020

9.75

6.00

0.00

NGOM 10/1/2020

9.75

6.00

0.00

NGOM 11/03/2020

9.50

6.00

0.75

NGOM 12/01/2020

9.00

6.00

0.00

NGOM 01/05/2021

11.00

9.75

0.00

NGOM 02/02/2021

10.85

9.50

0.00

NGOM 03/02/2021

10.80

9.00

(0.05)

 

 

                                Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.50

1.25

NIGTB 1-Oct-20

4.00

0.50

1.00

NIGTB 12-Nov-20

4.00

0.50

0.75

NIGTB 14-Jan-21

4.00

0.50

0.40

NIGTB 11-Feb-21

4.00

0.50

0.15



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Money Markets

Money Market rates improved in today's session, closing lower by c.50bps on the average to close at 7.00% and 7.63% for OBB and OVN respectively. Market liquidity remained stable, estimated to close at c.N212Bn. 

We expect rates to move in tandem with system liquidity, the major driving force expected on the volume of OMO the CBN is expected to sell to mop up maturities of c.N296Bn.


                        Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

7.00

7.40

Overnight (O/N)

7.63

8.20

  

FX Market

The Naira remained stable for another consecutive session, posting no changes on the closing rates at most market segments. Volumes traded in the I&E FX window remain poor (c.$17Mn) off the back of little supply, with rates ranging between N380/$ to N390/$. The scarcity of the greenback is expected to remain in the interim as foreign investors and importers queue up at the CBN with pent up demand.


                              FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.94

386.94

Cash Market

440.00

445.00

Transfer Market

460.00

460.00

 

Eurobonds

The NGERIA Sovereign tickers continued its losing streak, as yields inched up for another consecutive session. Improved offers from local investors did nothing to bring out shy bids on the sovereign papers during the trading session. Yields inched up by c.33bps on the average across the sovereign curve. 

It was a mixed session for the NGERIA Corps tickers, as the short-dated papers (ACCESS 2021s & UBANL 2022s) strengthened while the longer-dated (SEPPLN 2023s and ETINL 2024s) gave up recent gains on the day.


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Related News

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3.      Federal Budget: FGN Receives Legislative Okay For Revised Borrowing Plan

4.      Invest in FGN Monthly Bond Auction - May 2020

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6.      Average Yield Marginally Sheds 4bps WoW on Skeletal Flows to the NT-Bills Space Amid Weak Sentiments

7.      Anchoria Fixed Income Monitor: FX Pressure Rebound as CBN Weakened Forward Rate

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9.      Nigerian Eurobonds Sustain Rally Momentum As Global Oil Prices Continue To Gain


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