Bonds & Fixed Income | |
Bonds & Fixed Income | |
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PROSHARE | |
PROSHARE |
Thursday, May 14, 2020 / 9:32 AM / By Zedcrest Capital / Header Image Credit: Toronto Storeys
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 |
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.
Related News
1.
DMO Publishes
the Revised External and Domestic Borrowing Guidelines
2.
Treasury Bill
Auction Holds On Wednesday May 13th, 2020
3.
Federal Budget:
FGN Receives Legislative Okay For Revised Borrowing Plan
4.
Invest in FGN
Monthly Bond Auction - May 2020
5.
Sub-Saharan
Eurobonds Rallied Following Further Oil Production Cuts By Saudi Arabia
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
8.
Central Bank Of
Nigeria Weakens Naira At The OTC FX Futures Market To Battle Dollar Scarcity
9.
Nigerian
Eurobonds Sustain Rally Momentum As Global Oil Prices Continue To Gain