Fixed Income Space Snoozed as Market Awaits Outcome of Final Bond Auction For 2020

Proshare

Tuesday, December 15, 2020  / 8:42 AM / by Zedcrest Capital / Header Image Credit: FBNQuest


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FGN Bonds

At the FGN bonds space, the market opened the week on a quiet note as we saw a slight pull-back from the recent weakness. These may be likened to the cut in the latest bond auction circular, which was offered 20Bn lower than last month, and the possible outcome of the bond auction scheduled to hold this week. We saw a bit of interest at the belly of the curve, particularly for the 2034s,2035s, and 2037s. However, the few trades dealt struggled to trade around 7.10% levels compared to 7.20% offered last week, the 2049s and 205s papers gained less traction today, quoted mainly around 7.40% levels, 100bps lower than previous week closing. Nevertheless, yields compressed by an average of 67bps across the benchmark curve.

 

We expect market activity to remain weak during tomorrow's trading session as market attention shifts to the outcome of the bond auction scheduled to hold on Wednesday.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

3.35

1.85

(1.83)

 

12.75 27-Apr-23

3.45

1.90

(2.55)

 

14.20 14-Mar-24

3.75

2.25

(2.27)

 

13.53 23-Mar-25

4.65

2.30

(1.37)

 

12.50 22-Jan-26

6.00

5.00

(1.00)

 

16.29 17-Mar-27

6.05

5.20

0.05

 

13.98 23-Feb-28

6.00

5.30

0.00

 

14.55 26-Apr-29

6.00

5.30

0.01

 

12.15 18-Jul-34

7.45

7.00

0.05

 

12.50 27-Mar-35

7.45

7.00

(0.05)

 

12.40 18-Mar-36

7.45

7.00

(0.15)

 

16.2499 18-Apr-37

7.45

7.00

(0.23)

 

9.80 24-Jul-45

7.50

6.80

0.00

 

14.80 26-Apr-49

7.65

7.10

0.00

 

12.98 27-Mar-50

7.65

7.10

0.01

 

 

Treasury Bills

Following the double auction (NTB and OMO) outcome held last week, we saw rates retraced across all maturities in the bills space, increasing aggressively across the curve. Although the market isn't trading at the auction levels, we saw tangible improvements in rate crossing over from the sub-one levels for the latest 1year issue. 

The latest one-year OMO/NTB bill issue stayed offered around 1.20%, although bids stood far apart at 1.70%, making it difficult to close, we also saw the interest for Jan- April bills, which was mainly offered around 0.30%. 

Tomorrow, we do not expect any immediate change in market mood to trading; however, we might see a bit of cherry-picking, especially on long-dated bills offered at attractive levels.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 01/05/21

5.00

0.15

0.00

NGOMOB 0 02/02/21

5.00

0.20

0.00

NGOMOB 0 03/02/21

5.50

0.20

0.00

NGOMOB 0 05/11/21

6.00

0.30

0.00

NGOMOB 0 06/08/21

6.00

0.30

0.00

NGOMOB 0 08/10/21

6.50

0.35

0.00

NGOMOB 0 09/07/21

6.50

0.50

0.00

NGOMOB 0 10/19/21

7.00

0.50

0.00

 

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 12/31/20

5.00

0.15

0.00

NIGTB 0 01/14/21

5.00

0.15

0.00

NIGTB 0 02/11/21

5.50

0.20

0.00

NIGTB 0 03/11/21

5.50

0.30

0.00

NIGTB 0 04/29/21

5.50

0.30

0.00

NIGTB 0 05/13/21

6.00

0.30

0.00

NIGTB 0 06/10/21

6.00

0.35

0.00

NIGTB 0 07/01/21

6.50

0.35

0.00

NIGTB 0 08/26/21

6.50

0.35

0.00

NIGTB 0 09/09/21

7.00

0.50

0.00

NIGTB 0 10/14/21

7.00

0.65

0.00

 


Money Markets

The interbank market opened the new week still adequately liquid, closing the day at approximately N382.66bn positive. However, we saw a slight movement in OBB and OVN, increasing by an average of c.19bps to close the day at 0.67% and 1.08%, respectively.

We expect rates to remain low close but reverse towards the end of the week as debits from bi-weekly retail auction and bond auction hit the system.

 

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

0.67

0.50

Overnight (O/N)

1.08

0.88

 

FX Market

The Nigerian IEFX window was relatively stable, with rates depreciating slightly compared to Friday's closing, although the volumes traded at this level were very scanty.

At the parallel market, the Naira lost approximately N1.50K in both cash and transfer window to close at N475.00/$ and N490.00/$ respectively, while the CBN Spot and SMIS rates remained static at N379.00/$ and 380.69/$ respectively.

 

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

394.10

394.00

Cash Market

475.00

473.50

Transfer Market

490.00

489.00

 

Eurobonds

The NIGERIA Sovereigns resumed its bullish run in today's trading session, as demand improved across the sovereign curve, especially on mid-tenured papers, caused mostly by short-covering by market dealers. By and large, Yields compressed by an average of c.6bps across the sovereign curve.

The NIGERIA Corporates opened the week on a rather drab session as the market remained lowly supplied on most of the tracked papers.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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