Federal Budget: FGN Receives Legislative Okay For Revised Borrowing Plan

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Wednesday, May 13, 2020 /08:30 AM / By Zedcrest Capital / Header Image Credit: All Africa 


 Proshare Nigeria Pvt. Ltd.


Below are highlights of trading activities in the fixed income and forex market on May 12, 2020 

 

FGN Bonds

Yields Bond Market saw a reversal in today's session, fueled by local investors looking to invest liquidity from OMO maturities. Bids improved across the curve, but with relatively little volumes passed. Interest remained mostly on the 2023s and 2027s maturity. Consequently, yields compressed by c.11bps on the average across the benchmark curve.

 

The DMO issued its bind offer circular for the May 2020 FGN Bond Auction, making no changes to the N60Bn on offer across 3 maturities. Expectations still remain for a revised quarterly bond auction by the DMO, post-legislative approvals, as the market looks for guidance as to how the debt office plans to raise the additional amounts approved by the legislature to fund the federal budget. We maintain a cautious approach in the interim.


Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

8.08

5.04

(0.02)

 

16.39 27-Jan-22

9.23

5.47

(0.01)

 

12.75 27-Apr-23

10.73

8.64

(0.04)

 

14.20 14-Mar-24

10.40

8.44

(0.22)

 

13.53 23-Mar-25

9.35

8.20

(0.60)

 

12.50 22-Jan-26

10.70

10.03

0.00

 

16.29 17-Mar-27

11.26

11.00

0.00

 

13.98 23-Feb-28

11.32

10.98

(0.01)

 

14.55 26-Apr-29

11.87

11.00

(0.09)

 

12.15 18-Jul-34

11.70

11.25

(0.29)

 

12.40 18-Mar-36

11.69

11.50

(0.28)

 

16.2499 18-Apr-37

11.94

11.50

0.00

 

14.80 26-Apr-49

12.76

12.60

0.06

 


 

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Treasury Bills

A second consecutive session of well-bided OMOs with little offers available drove rates on OMOs down again today. Demand from local and offshore players across the curve persisted in the market, especially at the long-end of the curve, pushing rates on the most active paper (30Mar2021) down to lower 10.00% levels. Rates compressed by c.125bps on the average across the benchmark OMO curve.

 

 

The NTBs also traded on bullish note ahead of the bi-weekly auction. Retail-driven demand pushed rates further down by c.5bps on the average across the benchmark NTB curve.

 

At the NTB auction, we expect stop rates to close even lower than the previous auction given the small amount on offer.


NTB Auction Expectation - May 14, 2020

Tenor

Last Stop Rate (%)

Offer (N'bn)

Expectation (%)

91-day

1.85

4.38

1.15 - 1.50

182-day

2.499

12.92

2.20 - 2.35

364-day

3.84

16.54

3.45 - 3.65

Benchmark OMO Bills

 

Description

Bid (%)

Offer (%)

Day Change (%)

 

NGOM 5/14/2020

9.75

6.00

(1.25)

 

NGOM 6/4/2020

9.75

6.00

(0.25)

 

NGOM 7/2/2020

9.00

5.00

(1.00)

 

NGOM 8/13/2020

9.75

6.00

(0.25)

 

NGOM 9/3/2020

9.75

6.00

(1.50)

 

NGOM 10/1/2020

9.75

6.00

(1.75)

 

NGOM 11/03/2020

8.75

6.00

(2.75)

 

NGOM 12/01/2020

9.00

6.00

(2.75)

 

NGOM 01/05/2021

11.00

9.75

0.00

 

NGOM 02/02/2021

10.85

9.50

(1.15)

 

NGOM 03/02/2021

10.85

9.00

(1.15)

 

Benchmark NTBills

 

Description

Bid (%)

Offer (%)

Day Change (%)

 

NIGTB 2-Jul-20

2.75

0.50

0.25

 

NIGTB 1-Oct-20

3.00

1.00

0.00

 

NIGTB 12-Nov-20

3.25

1.00

(0.25)

 

NIGTB 14-Jan-21

3.60

1.00

(0.10)

 

NIGTB 11-Feb-21

3.85

1.00

(0.15)

 

 

Money Markets

System liquidity opened on an improved note, opening at c.N217bn positive. Money Market rates eased slightly, as OBB and OVN rates closed the day lower at 7.40% and 8.20% respectively.

 

We expect rates to remain stable for most of the week.

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

7.40

8.50

Overnight (O/N)

8.20

9.63

 


FX Market

The Naira has continued to remain stable across most market segments for another consecutive session. The only change recorded on the day was on the cash rate in the parallel market, which lost N1 to close at N445.00/$.

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

445.00

444.00

Transfer Market

460.00

460.00


Eurobonds

The rally in the NGERIA Sovereign tickers lost some steam in today's trading session, with other sub-Saharan sovereigns like Angola and Ghana outperforming Nigeria due to some profit-taking activity. Improved supply in the market caused yields across the sovereign curve to close higher by c.81bps on the average.

 

On the other hand, the NGERIA Corps tickers continued to see healthy demand from local investors, mostly on the UBANL 2022s (+77bps) and FIDBAN 2022s (+113bps).

 

 Proshare Nigeria Pvt. Ltd.




Proshare Nigeria Pvt. Ltd.


 

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