Bonds & Fixed Income | |
Bonds & Fixed Income | |
921 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Monday, July 27, 2020 / 10:20 PM / By Zedcrest Capital / Header Image Credit: Business Day
The
FGN bonds space opened the week on a very hushed tone as yield continued to
drop across the benchmark curve. With the bulls still in the market, one would
have expected exciting actions, however, we saw them scramble for bonds at a
very slow pace while hoping for more profit-taking actions from the bears which
might aggress slight uptick in yield.
Few
of the market actions were on the 2026s and 2035s bond with trades settling
around 5.45% and 8.90% on both bonds respectively. The 2049s and 2050s on the
other were largely quoted at 9.75%/9.67% for the most of the trading session
albeit few trades consummated at those levels. Subsequently, the average yield
on the benchmark curve compressed by c.4bps compared to Friday's closing.
For
tomorrow, we expect the market to continue to trade at this pace although most
of the actions would most likely be skewed towards the longer-dated papers,
with exception to the shortest-dated auction paper (2026 maturity).
Benchmark FGN Bonds |
||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
16.39 27-Jan-22 |
3.72 |
2.65 |
(0.02) |
|
12.75 27-Apr-23 |
4.01 |
3.50 |
(0.18) |
|
14.20 14-Mar-24 |
4.03 |
3.29 |
(0.00) |
|
13.53 23-Mar-25 |
5.00 |
4.02 |
0.00 |
|
12.50 22-Jan-26 |
5.91 |
5.19 |
(0.09) |
|
16.29 17-Mar-27 |
7.09 |
6.44 |
0.00 |
|
13.98 23-Feb-28 |
7.27 |
6.00 |
(0.07) |
|
14.55 26-Apr-29 |
7.95 |
7.39 |
0.19 |
|
12.15 18-Jul-34 |
8.97 |
8.05 |
0.00 |
|
12.40 18-Mar-36 |
9.02 |
8.54 |
(0.10) |
|
16.2499 18-Apr-37 |
9.21 |
9.04 |
(0.13) |
|
14.80 26-Apr-49 |
9.85 |
9.63 |
(0.04) |
|
Treasury
Bills
At
the OMO space, it was a dull day for the bulls as we saw market offers dried up
due to the non-issuance of OMO by the APEX bank despite the robust system
liquidity available to gulp large bill sizes. The trading session opened the
day one-way all bids and no offer across the benchmark curve, however, by
mid-day, we saw slight actions on December and January bills albeit in low
volumes with trades settling at 3% mid. At the long-end, we saw most of the
market bids for May/June bills at 4.80% with no offer to match for a trade. Consequently,
yields compressed by an average of c.9bps on the benchmark curve.
For
tomorrow, rates will most likely drop further, and offers remain scarce as the
bulls continue to scramble to invest in the few bills available to buy.
Benchmark OMO Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NGOMO 8/13/2020 |
1.50 |
0.01 |
0.00 |
NGOMO 9/3/2020 |
5.50 |
0.01 |
0.00 |
NGOMO 10/1/2020 |
6.00 |
0.01 |
0.00 |
NGOMO 11/03/2020 |
6.00 |
0.01 |
0.00 |
NGOMO 12/01/2020 |
6.50 |
0.01 |
0.00 |
NGOMO 02/02/2021 |
6.80 |
1.00 |
(0.20) |
NGOMOB 0 03/02/21 |
6.80 |
1.00 |
(0.20) |
NGOMOB 0 03/02/21 |
6.80 |
1.00 |
(0.20) |
NGOMOB 0 05/11/21 |
6.80 |
1.00 |
(0.20) |
Benchmark NTBills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NIGTB 10/1/2020 |
3.00 |
0.01 |
0.00 |
NIGTB 11/12/2020 |
3.00 |
0.01 |
0.00 |
NIGTB 01/14/2021 |
3.50 |
0.10 |
0.00 |
NIGTB 02/11/2021 |
3.50 |
0.10 |
0.00 |
NIGTB 04/29/2021 |
3.50 |
0.10 |
(0.50) |
NIGTB 05/13/21 |
3.50 |
0.10 |
(0.50) |
NIGTB 06/10/21 |
4.00 |
0.10 |
0.00 |
Money
Markets
The
robust interbank system liquidity of +c.N604.45BN continues to tapper down
rates with no major funding need to drag rates upward. OBB and OVN rates lost
approx. 22% compared to Friday's levels closing the day at 1.13% and 1.88%
respectively.
With
no significant funding pressures and reduced probability of an OMO auction, we
expect the market rate to remain around this level at the interbank trading
session tomorrow.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
1.13 |
1.60 |
Overnight (O/N) |
1.88 |
2.20 |
FX
Market
The I&E FX window remained less active as
the market volumes continue to dwindle while participants stayed bided between
N385.00/$ and N389.00/$, causing the closing rate to depreciate by 0.06% from
Fridays' closing.
At the cash and transfer window, FX pressure continues
to mount as the shortage of supply took a major toll in that space with Naira
depreciating by an average of N1.5k for both markets closing the day at N473/$
and N474/$ respectively.
FX Market |
||
Current (N/$) |
Previous ( N/$) |
|
CBN Spot |
381.00 |
381.00 |
CBN SMIS |
380.69 |
380.69 |
I&E FX Window |
389.25 |
389.50 |
Cash Market |
473.00 |
471.00 |
Transfer Market |
474.00 |
473.00 |
Eurobonds
The
NGERIA Sovereign tickers opened the week better offered, with less
aggressive bids seen across the curve, especially for the mid and longer-dated
papers. By and large, yield expanded by an average of c.7bps across the curve.
At the SSA space, Angola's bond continued to gain positive vibes following the
announcement by Finance minister on their government intentions to participate
in the G20's debt service suspension Initiative. Although we saw no immediate
reactions in the Angola bonds, offer prices reprised higher by the close of the
business especially on the 25s and 28s papers.
At NGERIA Corps tickers had a mixed session, with a few of the tracked
papers moving in opposite directions based on the market interest. Yields on the
Zenith 22s and SEPPLN 23s headed south to lead the pack compressing by -11bps
and -10bps respectively while the ACCESS 21s headed north expanding by a
whooping +59bps.
Related
News
1.
Anchoria Fixed Income Monitor: Booming Gold Price amid
Pandemic
2.
Average NT-Bills
Yield Declines to 1.8%; PMA Holds this Wednesday
3.
NOVA Merchant Bank's
Debut N10bn Bond Oversubscribed by 300%
4.
The DMO's Latest
Good Effort
5.
DMO Laughs To The
Bank At FGN Bond Auction, Raising 30-Year Debt at 9.95%
6.
Summary of FGN Bond
Auction Results For July 2020