Bonds & Fixed Income | |
Bonds & Fixed Income | |
990 VIEWS | |
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Below were the highlights of trading activities in the fixed income and forex market on August 05, 2019
Bonds
Yields in the FGN Bond Market resumed an uptrend following selloff by some offshore clients on the mid to long end of the curve. Yields were consequently higher by c.12bps, with the most selling interests observed around the 10-year bucket.
We
expect bond yields to remain slightly pressured, as offshore investors are
expected to remain risk off, given the decline in oil prices (now below $60pb)
and escalating US-China trade tensions.
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
14.50 15-Jul-21 |
12.96 |
12.75 |
(0.03) |
16.39 27-Jan-22 |
13.12 |
12.18 |
0.04 |
12.75 27-Apr-23 |
13.43 |
12.89 |
0.05 |
14.20 14-Mar-24 |
13.65 |
13.01 |
0.21 |
13.53 23-Mar-25 |
13.65 |
12.79 |
0.16 |
12.50 22-Jan-26 |
13.79 |
13.61 |
0.12 |
16.29 17-Mar-27 |
13.86 |
13.65 |
0.15 |
13.98 23-Feb-28 |
13.98 |
13.67 |
0.28 |
12.15 18-Jul-34 |
14.02 |
13.88 |
0.04 |
12.40 18-Mar-36 |
14.02 |
13.84 |
0.13 |
16.2499
18-Apr-37 |
13.95 |
13.81 |
0.12 |
14.80 26-Apr-49 |
14.18 |
14.05 |
0.14 |
Source: Zedcrest Dealing Desk
Treasury Bills
The
T-bills market was slightly bullish, as the buoyant system liquidity levels in
the money market spurred some buying interests on the short end of the curve.
Demand interests were however subdued on the mid to long end of the curve, with
most bids unchanged from the c.11.00% mark.
We
expect short term yields to be remain supported by the relatively buoyant
system liquidity, whilst interests on the mid to long end are expected to
remain scanty as market players anticipate a possible renewed OMO issuance by
the CBN.
Benchmark
Treasury Bills |
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Description |
Bid (%) |
Offer (%) |
Day Change (%) |
12-Sep-19 |
10.50 |
9.50 |
(0.40) |
3-Oct-19 |
10.55 |
9.50 |
(0.40) |
14-Nov-19 |
10.40 |
9.50 |
(0.40) |
5-Dec-19 |
10.85 |
10.65 |
(0.15) |
2-Jan-20 |
11.05 |
10.70 |
0.05 |
6-Feb-20 |
11.10 |
10.75 |
0.15 |
19-Mar-20 |
11.00 |
10.60 |
0.00 |
2-Apr-20 |
11.10 |
10.85 |
0.10 |
14-May-20 |
11.05 |
10.70 |
0.05 |
04-Jun-20 |
11.10 |
10.60 |
0.10 |
02-Jul-20 |
10.95 |
10.60 |
(0.05) |
Source: Zedcrest Dealing Desk
Money Market
Rates
in the money market remained relatively stable, as system liquidity remained at
an estimated c.N220bn positive, despite outflows for FX auction sales by the
CBN. The OBB and OVN rates consequently ended the session at 5.43% and 6.00%
respectively.
We
expect rates to trend slightly lower tomorrow, as there are no significant
outflows anticipated.
Money Market
Rates |
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Current (%) |
Previous (%) |
Open Buy Back (OBB) |
5.43 |
5.64 |
Overnight (O/N) |
6.00 |
6.43 |
Source: FMDQ, Zedcrest
FX Market
At the interbank, the Naira/USD rate inched higher by 5k to
N306.90/$ at the spot market, while the SMIS rate remained unchanged at
N357.68/$. The NAFEX rate at the I&E window fell by 36k to close at
N362.21/$, whilst volume traded declined by c.58% to $124m. At the parallel
market, the cash and transfer rates remained stable at N357.50/$ and N362.00/$
respectively.
FX Market |
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Current (N/$) |
Previous ( N/$) |
CBN Spot |
306.90 |
306.85 |
CBN SMIS |
357.68 |
357.68 |
I&E FX Window |
362.21 |
362.57 |
Cash Market |
357.50 |
357.50 |
Transfer Market |
362.00 |
362.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
The NGERIA Sovereigns recorded its highest decline in over
three months, as the Chinese devaluation of the Yuan and ban on US crop imports
further escalated its trade dispute with the US. Prices were down by as much as
2pct on most of the long tenured bonds, whilst yields rose by c.25bps on the
day.
We also witnessed improved offers in the NGERIA Corps, with
better sellers seen mostly on the ETINL 24s.
Related News
1. Average Yield on
T-Bills Instruments Marginally Advances to 11.2% Amidst Absence of OMO Auctions
2. August 2019 FGN
Savings Bonds Offer for Subscription
3. Nigerian
Eurobonds Dip Following Less Dovish US FED Stance
4. Bond Yields
Moderate Further Amid Continued Local Demand
5. NAFEX Rate Hits
Five Month High on Lower FPI Inflows
6. Investors Renew
Demand for Long Tenured FGN Bonds
7. Bullish Run
Halts as Average Yield Advanced 54bps WoW on Tight System Liquidity
8. FMDQ OTC Holds
7th AGM, Achieves 22% Turnover From Trading Activities in 2018 FY
9. Traders Take
Profit on Nigerian Eurobonds Ahead of US FED Rate Decision
10. Summary of FGN
Bond Auction Results For July 2019
11. July 2019 FGN
Bond Auction Oversubscribed