Liquidity Continues To Positively Impact Yields Across The Fixed Income Markets

Proshare

Wednesday, April 08, 2020 / 7:30 AM / By Zedcrest Capital / Header Image Credit: Corporate Finance Institute

 

Below are highlights of trading activities in the fixed income and forex market on April 07, 2020 

 

 

FGN Bonds

Yields of FGN Bonds continued to drop in today's session as the rally persisted for another consecutive trading session. Demand remained skewed to the short-end of the benchmark bond curve, with the 2023s and 2024s the day's top gainers shedding 38bps and 60bps respectively. We also noted some demand at the mid-end of the curve, with local investors bidding for the 2028s and 2029s maturities at that end. On the average, yields compressed further by c.16bps across the benchmark bond curve, bringing the week's cumulative drop to c.34bps.

 


Proshare Nigeria Pvt. Ltd.


We expect the current demand to persist in the short-term as local investors remain constrained for investment outlets in other asset classes and the monthly bond auction still 2 weeks away. Supply is expected via a new wave of corporate issuances starting with the Dangote N100bn offering around the corner and possible others in the pipeline and we expect some slowdown in FGN Bond purchases ahead of these primary auctions.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.03

5.38

(0.13)

 

16.39 27-Jan-22

7.32

5.71

(0.01)

 

12.75 27-Apr-23

10.21

9.38

(0.38)

 

14.20 14-Mar-24

10.69

10.10

(0.60)

 

13.53 23-Mar-25

12.02

11.12

(0.00)

 

12.50 22-Jan-26

12.55

11.76

0.00

 

16.29 17-Mar-27

12.49

12.06

(0.15)

 

13.98 23-Feb-28

12.45

11.98

(0.10)

 

14.55 26-Apr-29

12.48

12.06

(0.18)

 

12.15 18-Jul-34

12.60

12.00

(0.24)

 

12.40 18-Mar-36

12.92

11.70

0.00

 

16.2499 18-Apr-37

12.88

12.35

0.00

 

14.80 26-Apr-49

12.71

12.50

(0.23)

 

 

Treasury Bills

Local banks remained heavy buyers for OMO bills in today's trading session, amidst ample system liquidity. This demand flow saw rates drop at the mid- (Sept. maturities) and long-end (Feb. & Mar. maturities) of the curve, breaking the 12.00% resistance point to trade as low as 11.80% intraday. Rates consequently dropped by c.50bps on the average across the benchmark OMO curve.


Demand also improved for NTBs, with bids dropping by c.32bps on the average across the benchmark NTB curve following a dearth in supply for these papers.


Proshare Nigeria Pvt. Ltd.


We maintain expectations for the demand to remain heavy leading up to the coming public holidays and banks look to lock up excess funds.


Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 5/14/2020

12.50

9.00

0.00

NGOMO 6/4/2020

12.50

9.00

0.00

NGOMO 7/2/2020

12.50

9.00

0.00

NGOMO 8/13/2020

12.50

10.00

(0.50)

NGOMO 9/3/2020

11.80

10.00

(1.20)

NGOMO 10/1/2020

12.50

10.00

(0.50)

NGOMO 11/03/2020

12.50

11.00

(0.50)

NGOMO 12/01/2020

12.50

11.00

(0.50)

NGOMO 01/05/2021

12.25

11.50

(0.75)

NGOMO 02/02/2021

12.35

10.00

(0.65)

NGOMOB 0 03/02/21

12.20

10.00

(0.80)

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

2.20

1.00

(0.30)

NIGTB 1-Oct-20

3.20

1.00

(0.30)

NIGTB 12-Nov-20

4.00

1.00

0.00

NIGTB 14-Jan-21

4.00

2.00

(0.50)

NIGTB 11-Feb-21

4.00

1.50

(0.50)

                                                                         


Money Market

Money Market rates dropped today as system liquidity remains buoyant, increasing by 5.11% to open at c.N515bn. OBB and Overnight rates dropped by c.100bps to close at 3.50% and 3.83% respectively.


Money market rates are expected to remain at this level until Thursday when the CBN is expected float its regular weekly OMO auction.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.50

4.50

Overnight (O/N)

3.83

4.80

 


FX Market

The Naira depreciated further today at the I&E FX Window today, losing 0.48% of its value to close at N384.83/$. The CBN also revised its SMIS rate to N380.69/$, 6.19% weaker than its previous rate of N358.51/$ off the back of backed up demand for dollars by foreign investors. The CBN Spot rate remained unchanged at N361.00/$

 

The Naira remained stable at the parallel market, with both the cash and transfer rates remaining unchanged at N416.00/$ and N433.00/$ respectively.

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

 361.00

 361.00

CBN SMIS

 380.69

 358.51

I&E FX Window

 384.83

 383.00

Cash Market

 416.00

 416.00

Transfer Market

 433.00

 433.00

 

Eurobond

The NGERIA Sovereign bounced back from the previous day’s losses to post gains across the curve as demand from local investors continue to provide support for the papers. Yields dropped by c.75bps on the average across the sovereign curve by the close of the trading session.

The NGERIA Corps tickers saw some improved sentiment as well, with some demand seen on the UBANL 22s and FIDBAN 22s papers.

 

 



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

Related News

1.      United Capital Plc Raises N5.3bn in Commercial Paper Issuance

2.     Nigerian Breweries PLC Issue of up to N30bn Series 7 and Series 8 Commercial Paper Now Open

3.     OMO Rates Continue To Plummet Amidst Excess System Liquidity

4.     NSE Lists March 2020 FGN Savings Bond Issue

5.     Now Open - Dangote Cement Plc Bond Offer; April FGN Savings Bonds Cancelled

6.     Anchoria Fixed Income Monitor: Buoyant System Liquidity amid COVID-19

7.     NB Launches Series 7 and 8 of Commercial Paper Programme

8.     Dangote Cement Series 1 up to N100bn 5-year Under Its N300bn Bond Issuance Programme Now Open

9.     OMO Rates Continue To Plummet Amidst Excess System Liquidity

10.  Rates Close Lower At The Treasury Bills Primary Auction, Demand For OMO Lingers

11.   COVID-19: DMO Suspends April 2020 FGN Savings Bond Offer

12.  Net CRR Refund Eases Liquidity Crunch, Drives Demand for OMO Bills

13.  Axxela Funding 1 Plc - Up to N10bn Series 1 Bonds Is Now Open

14.  Bearish Performance Reversed as Average Yield Dips 32bps WoW to 3.7%

 


Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP