Bonds & Fixed Income | |
Bonds & Fixed Income | |
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PROSHARE | |
PROSHARE |
Wednesday, January 20, 2021 / 9:31 AM / By Zedcrest Capital / Header Image Credit: iStock
FGN Bonds
Trading activities improved slightly in the
FGN bond space during today's trading session, as FGN bond coupon inflows from
the previous day supported the market. We noted demand on the 2028s and 2029s
papers at around 7.90%-8.00% levels, as market participants reduced their
expectations for a higher yield at tomorrow's auction for the 2027s bond on
offer.
We also saw sellers hit bids at the belly of
the curve at around 9.00% (especially the 2034 paper) at the beginning of the
trading session. However, this was short-lived as bargain hunters stepped in to
snap up bonds at these new levels. Consequently, yields expanded by c.6bps on
the average across the benchmark bond curve.
We expect a calm trading session tomorrow, and
market participants shift their focus to the first and most anticipate FGN bond
auction of the year 2021.
FGN Bonds Expectation - January 2021 |
|||
Tenor |
Offer
(N'bn) |
Expected
Stop Rate (%) |
Previous
Stop Rate (%) |
Mar-27 |
50.00 |
7.60-7.80 |
- |
Mar-35 |
50.00 |
8.75-8.90 |
6.945 |
Jul-45 |
50.00 |
8.90-9.10 |
7.000 |
Benchmark FGN Bonds |
||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
16.39
27-Jan-22 |
3.97 |
1.51 |
(0.03) |
|
12.75
27-Apr-23 |
5.46 |
2.93 |
(0.01) |
|
14.20
14-Mar-24 |
6.20 |
3.81 |
(0.01) |
|
13.53
23-Mar-25 |
7.06 |
4.38 |
(0.50) |
|
12.50
22-Jan-26 |
8.06 |
6.15 |
0.00 |
|
16.29
17-Mar-27 |
8.11 |
6.19 |
(0.51) |
|
13.98
23-Feb-28 |
8.29 |
7.75 |
(0.01) |
|
14.55
26-Apr-29 |
8.55 |
7.87 |
0.00 |
|
12.15
18-Jul-34 |
9.61 |
8.85 |
0.46 |
|
12.50
27-Mar-35 |
9.73 |
8.65 |
0.55 |
|
12.40
18-Mar-36 |
9.61 |
8.80 |
0.43 |
|
16.2499
18-Apr-37 |
9.52 |
8.80 |
0.42 |
|
9.80 24-Jul-45 |
9.59 |
8.70 |
0.00 |
|
14.80
26-Apr-49 |
10.23 |
9.05 |
0.00 |
|
12.98
27-Mar-50 |
10.26 |
8.90 |
0.00 |
|
Treasury Bills
It was a
tale of two halves in the treasury bills space today with buying interests on
the short-dated bills by local banks, supported by OMO maturities while the
medium- to long-dated bills remained firmly bearish with sustained supply from
offshore participants. Yields on short-dated T-bills (March to April 2021
T-bills maturities) remained depressed, with an average rate of 0.25% due to
demand pressure. The tiny volumes offered by traders on this tenor bucket also
made it difficult to match the large appetite for short-dated instruments. The
long end of the curve (December 2021- January 2022) traded within a tight range
of 2.10%-2.25% for a larger part of the session with little volumes crossed.
We expect
to see some order-driven demand tomorrow as market participants cherry-pick on
OMO T-bills offered at attractive levels, especially at the tail of the curve.
Benchmark OMO Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NGOMOB 0
02/02/21 |
8.00 |
0.03 |
0.00 |
NGOMOB 0
03/02/21 |
8.00 |
0.03 |
0.00 |
NGOMOB 0
05/11/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
06/08/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
08/10/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
09/07/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
10/19/21 |
8.00 |
0.05 |
0.00 |
NGOMOB 0
11/02/21 |
8.00 |
0.05 |
0.00 |
NGOMOB 0
12/07/21 |
8.00 |
0.05 |
0.00 |
Benchmark NTBills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NIGTB 0
01/14/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
02/11/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
03/11/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
04/29/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
05/13/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0 06/10/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
07/01/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
08/26/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
09/09/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0
10/14/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0 11/11/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0
01/14/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
02/11/21 |
8.00 |
0.03 |
0.00 |
Money Markets
The interbank system liquidity
improved significantly to close at c. N530Bn today due to inflows from OMO
maturities hitting the system. Consequently, OBB and OVN rates dropped again by
c.23bps on average to close at 0.38% and 0.50% in the absence of local banks'
funding activities.
We expect funding rates to remain
steady in the money-market space tomorrow, as there are no anticipated
significant outflows that would push rates northwards.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
0.38 |
0.50 |
Overnight (O/N) |
0.50 |
0.83 |
FX Market
Transaction volumes dropped
significantly by approximately 61% in the I&E FX window, with tiny volumes
($26.83m) changing hands between market participants in roughly 200 deals,
albeit the Naira appreciated by N0.48k. Most banks remained bided for most of
the trading session between N390.00/$ and N410.00/$.
At the parallel market, the cash
segment appreciated by N1, supported by the weekly FX sales to BDC from the
Apex bank.
FX Market |
||
Current (N/$) |
Previous (N/$) |
|
CBN Spot |
379.00 |
379.00 |
CBN SMIS |
380.69 |
380.69 |
I&E FX Window |
393.35 |
393.83 |
Cash Market |
473.00 |
474.00 |
Transfer Market |
485.00 |
485.00 |
Eurobonds
Trading activities improved in the SSA Eurobond
space today, opening and staying in the green all day as market participants
stayed risk-on throughout the session. A larger part of the market movement was
seen on the mid and longest-dated bonds for the NIGERIA sovereigns,
causing yields to compress across the sovereign curve at an average of 5bps
D/D. Similarly, we noted slight recovery for ANGOLA, GHANA, and IVYCST bonds strengthening by -c.3bps, -c.3bps and -c.1bps, respectively.
The NIGERIA Corporates traded on a similar note, picking up steam as buyers improved bids on most of the tracked papers, especially for the ACCESS 21s, ETINL 2024s, and SEPLLN 2022s, which saw the largest movements, shedding -c.18bps, -c.23bps and -c.58bps respectively on the yield.
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