FGN Bond Yields Still Give Way Despite Improved Offers Across The Curve

Proshare

Wednesday, July 01, 2020 / 05:43 AM / by Zedcrest Capital / Header Image Credit: The Economic Times


Proshare Nigeria Pvt. Ltd.


FGN Bonds

Activities level increased in the bond space with bids opening lower across most maturities albeit some bears showed improved offers especially at the long end of the curve to match the bids. The 2035s and 2050s were the most-sought after bonds in the market settling around 10.00% and 10.80% levels respectively for trades. We also saw a few interests for 2023s and 2026s, offered around 5.50% and 7.25% respectively but very few volumes traded. Nevertheless, yields compressed further by an average of c.11bps on the benchmark curve.

We expect to see more actions as we continue to see improved offers for selected papers in the bond space.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

4.50

3.13

(0.03)

 

16.39 27-Jan-22

4.53

3.79

(0.17)

 

12.75 27-Apr-23

6.44

5.04

(0.10)

 

14.20 14-Mar-24

6.35

5.74

(0.14)

 

13.53 23-Mar-25

6.99

5.10

(0.04)

 

12.50 22-Jan-26

7.77

6.80

(0.40)

 

16.29 17-Mar-27

8.90

8.06

0.05

 

13.98 23-Feb-28

8.70

8.17

(0.31)

 

14.55 26-Apr-29

8.90

8.30

(0.20)

 

12.15 18-Jul-34

10.12

9.77

0.00

 

12.40 18-Mar-36

10.14

9.87

(0.06)

 

16.2499 18-Apr-37

10.12

9.90

0.00

 

14.80 26-Apr-49

10.97

10.70

(0.07)

 

 

Treasury Bills

Similar to the FGN bond market, we saw healthy order-driven demand for mid-long tenured OMO bills particularly on Dec - Jan papers and 23rd Feb bill with trades settling around 5.40% levels for these papers except for the December bills.  While offers hovered around 4.50% for the December bill, very few trades settled at these levels with bids staying far apart at 5% levels. We also saw more aggressive bids across the benchmark curve consequently yields dropped by an average on c.87bps D/D.

The NTB space stayed flat for most of the trading session with little volumes passing through the belly of the curve around 1.75% levels.

We expect the market to coast around these levels while order-driven requests continue to drive market activities. We also anticipate the NTB side to remain frail, as local players look to the outcome of the T-bills PMA scheduled tomorrow.

 

Primary Market Auction Expectation

NTB  - 01 Jul 2020

Tenor

Offer (N'bn)

Expected Rate (%)

Previous Rate (%)

91 days

10.00

1.50 - 1.80

1.8000

182 days

20.00

1.80 - 2.05

2.0400

364 days

58.86

3.45 - 3.75

3.7460

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 8/13/2020

4.00

2.50

0.25

NGOMO 9/3/2020

5.00

4.00

(1.85)

NGOMO 10/1/2020

5.50

4.25

(1.35)

NGOMO 11/03/2020

5.60

3.50

(1.25)

NGOMO 12/01/2020

6.00

4.50

(0.85)

NGOMO 02/02/2021

6.50

4.50

(0.75)

NGOMOB 0 03/02/21

6.50

4.80

(1.00)

NGOMOB 0 03/02/21

6.50

4.80

(1.00)

NGOMOB 0 05/11/21

7.00

4.80

0.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

3.50

0.50

0.00

NIGTB 11/12/2020

3.75

0.50

0.00

NIGTB 01/14/2021

4.00

0.50

0.00

NIGTB 02/11/2021

4.00

0.50

0.00

NIGTB 04/29/2021

4.00

0.50

0.00

NIGTB 05/13/21

4.00

4.80

0.00

NIGTB 06/10/21

4.00

4.80

0.00

 


Money Markets

OBB and OVN rates increased slightly by c20bps on the average compared to yesterday's close with little funding pressures added to local banks.

We expect rates to remain at these levels tomorrow with slight adjustments depending on activities amongst market participants who intend to fund normal day-to-day business transactions.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

15.00

14.92

Overnight (O/N)

16.00

15.67

 

 

FX Market

The liquidity squeeze persevered in the interbank I & E market as closing rate depreciated by 0.60k compared to yesterday while most banks remained bided for most of the trading session with bids ranging between N385/$ and N389/$ naira to the dollar.

Although the CBN spot and SMIS remained unchanged, Naira appreciated slightly in the cash and transfer market by 0.17% due to the low transaction flows witnessed in that space today.

 

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

386.50

386.00

Cash Market

458.00

458.60

Transfer Market

460.00

461.00

 

Eurobonds

The NGERIA Sovereigns tickers traded on a hushed note although we saw improved bids across the benchmark curve consequently causing the yield to compress slightly by c.4bps in that space. We saw little interest in other sub-Saharan bonds like the Ghana 49s and 50s as well as the Angola 2025s papers, which remains the love of the markets. 

The NGERIA Corps saw some slight action with improved offers on the few tracked papers, particularly for FIDBAN 22s and ETINL 24s which dropped by c.14bps and c.28bps respectively.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Related News

1.         Treasury Bill Auction Holds On Wednesday July 1st, 2020

2.        Bond Yields Continue To Tank Despite A Sluggish Start To The Week

3.        Coming Soon: NOVAMBL Investments SPV Plc N10bn Series Bond Issuance

4.        Anchoria FI Monitor: MSCI Express Concern on the Depreciation of Liquidity in the Nigerian FX Market

5.        The Bears Resurface as Average Yield Inches 7bps WoW Due to Tight System Liquidity

6.        Bond Bulls Resumed Demand For FGN Bonds After The Previous Day's Pull-Back

7.        Angola Lead The Sub-Saharan Africa Eurobonds With Nigeria Strengthening In The Shadows

8.       Demand For Bonds Continues For Another Consecutive Session


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

READ MORE:
Related News
SCROLL TO TOP