DMO Sell N100bn at the Bond Auction as Rates Drop to a 5-Month Low

Proshare

Wednesday, February 19, 2020 / 07:00 AM / Zedcrest Capital / Header Image Credit: Financial Tribune


Below are highlights of trading activities in the fixed income and forex market on February 19, 2020

 

FGN Bonds

The Bond Market opened on a fairly quiet note, as attention shifted to the bond auction. We, however, saw decent demand on bonds offered at the auction, as market players traded on perceived sentiment of possible auction outcome. Yields dropped by c.1bp across the benchmark bond curve.

 

At the bond auction, the DMO sold a total of c.N100bn across the three maturities on offer (2023s, 2029s and 2049s), dropping stop rates by c.110bps, c.42bps and c.41bps to close at 8.75%, 10.70% and 12.15% respectively, with bid-to-cover ratios of 1.74X, 2.12X and 4.48X across all 3 tenors.

 

We expect a bullish market in tomorrow's session, buoyed by significant inflows from OMO maturities (c.N620bn) and market players' looking to cover lost bids at today's bond auction.

 

FGN Bonds Result - 19 February 2020

Maturity

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn) 

Apr-23

8.75

45.00

78.43

30.00

Apr-29

10.70

45.00

95.70

30.00

Apr-49

12.15

50.00

224.07

40.00

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

8.30

7.15

(0.02)

 

16.39 27-Jan-22

8.17

7.24

(0.01)

 

12.75 27-Apr-23

9.22

8.96

(0.22)

 

14.20 14-Mar-24

10.01

9.37

0.00

 

13.53 23-Mar-25

9.86

9.50

0.00

 

12.50 22-Jan-26

10.42

9.86

0.00

 

16.29 17-Mar-27

11.00

10.34

0.00

 

13.98 23-Feb-28

10.80

10.65

(0.04)

 

12.15 18-Jul-34

11.41

11.14

0.01

 

12.40 18-Mar-36

11.36

11.15

0.02

 

16.2499 18-Apr-37

11.52

11.06

0.19

 

14.80 26-Apr-49

12.35

12.28

(0.04)

 

 

Treasury Bills

The Treasury Bills market traded on an active note, as yields continue to plunge across the OMO curve. With OMO Maturities of c.N620bn expected to flow-in tomorrow, we saw strong buy-interest in OMO bills, especially the mid (1-Oct & 27-Oct) to long-dated OMO bills (19-Jan), as investors' reinvested incoming maturities. Yields dropped by an average of c.11bps across the curve.

 

The NTB side traded flat with a bearish undertone, as local investors sold-off in a bid to reinvest in other eligible fixed income instruments. Yields expanded by an average of c.60bps across the benchmark NTB curve.

 

We expect sustained demand of OMO maturities in tomorrow's session, as market players continue to reinvest the c.N620bn of maturing bills coming in tomorrow. We also anticipate the apex bank to float an OMO auction to tame excess liquidity.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

12.50

10.00

(0.10)

NGOMO 2-Apr-20

12.50

10.50

0.00

NGOMO 14-May-20

12.50

10.00

0.15

NGOMO 4-Jun-20

12.00

10.00

(0.25)

NGOMO 2-Jul-20

12.45

10.00

0.05

NGOMO 13-Aug-20

12.40

11.00

0.00

NGOMO 3-Sep-20

12.50

10.00

(0.10)

NGOMO 1-Oct-20

12.40

11.50

(0.30)

NGOMO 3-Nov-20

12.50

11.80

(0.20)

NGOMO 1-Dec-20

12.30

11.85

(0.20)

NGOMO 5-Jan-21

12.30

11.90

(0.30)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

7.00

1.00

1.00

NIGTB 2-Jul-20

7.50

1.00

0.50

NIGTB 1-Oct-20

7.50

2.00

0.50

NIGTB 14-Jan-21

7.50

2.00

0.50

`                                                                             


Money Market

System liquidity opened with c.N461.84bn, with rates dropping c.15bps after yesterday's slight reaction to the release of inflation figures. OBB and OVN rates closed at 3.20% and 4.10% respectively.

 

We expect rates to slightly drop, as inflows from OMO maturity (c.N620bn) positively impacts system liquidity, despite a potential mop-up by the CBN.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.20

3.42

Overnight (O/N)

4.10

4.17

 

 

FX Market

At the Interbank, the Naira/USD spot rate dipped by 50k to close at N307.00/$, while the SMIS rate remained unchanged at N358.51/$. The Naira appreciated at the I&E FX window, losing 4k to close the session at N364.91/$.

The parallel market witnessed significant changes, as the cash rate appreciated by 30k to close at N358.20/$, while the transfer rate depreciated by 50k to close the day at N365.00/$.


Proshare Nigeria Pvt. Ltd.


Eurobond

The NGERIA Sovereign tickers traded on a quiet note, with mixed sentiment across the sovereign yield curve. The long-end saw some slight sell-off, while the short to mid-end traded on a bullish note, reeling from a c.3.45% spike in oil prices D/D.


Demand persisted in the NGERIA Corps tickers, as yields continue to dip among most tracked papers. The SEPLLN 2023s further dipped by c.6bps, while the ACCESS 2021s and ETINL 2024s dropped by c.1bp apiece. 


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Related News

  1. Bond Market Reacts Sluggishly as January Inflation Figure Rises to an 11-Month High
  2. Anchoria Fixed Income Monitor: A Longer FX hedging Tool for Foreign Investors
  3. Bearish Momentum Halted as Average NT-Bills Yield Dips to 3.8% W-o-W
  4. NCM2020 (26) - Fixed Income Market Did Well in 2019 For Both Wholesale and Retail Investors
  5. African Countries Face Wall of Sovereign Debt Repayments
  6. Invest in FGN Monthly Bond Auction - February 2020
  7. Treasury Bill Yields Fall As Investors Rejuggle Portfolios
  8. African Countries Scramble for the Eurobond Market
  9. A Return to the Eurobond Market
  10. LAPO MFB SPV Plc Series 2 Bond Is Now Open
  11. Treasury Bill Auction Holds On Wednesday Feb 12th, 2020
  12. Local Corporates Taking Advantage of the Low Yield Environment
  13. Narrower Rate Differential Favouring Eurobonds

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP