Local Demand Persists to the Bond Market as Yields Continue to Compress

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Thursday, February 04, 2021 / 8:28 AM / By Zedcrest Capital / Header Image Credit: iStock


 

FGN Bonds

The recent demand witnessed in the FGN Bond market persisted for another consecutive trading session today, across the bond curve. The 2024s paper woke from its regular slumber today, as demand for the paper saw change hands at 6.10% levels. At the belly, demand for the 2028s and 2029s papers were sustained with trades being crossed around 8.40%. The 2034s and 2049s bonds were the most active at the long end of the curve, trading at 10.00% and 10.10% levels respectively. Consequently, yields compressed further by c.4bps on the average across the benchmark curve.

 

We expect to sustained levels of trading activity in tomorrow's session week, as demand is anticipated to continue to filter in at these levels against thin supply volumes.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

6.50

5.40

0.00

14.20 14-Mar-24

6.75

6.00

(0.10)

13.53 23-Mar-25

7.10

6.25

0.00

12.50 22-Jan-26

7.80

7.15

0.15

16.29 17-Mar-27

8.75

8.10

0.00

13.98 23-Feb-28

8.85

8.20

0.05

14.55 26-Apr-29

8.95

8.50

0.00

12.15 18-Jul-34

10.30

9.95

0.00

12.50 27-Mar-35

10.20

9.90

(0.10)

12.40 18-Mar-36

10.25

9.90

(0.10)

16.2499 18-Apr-37

10.30

9.95

(0.05)

9.80 24-Jul-45

10.42

9.95

(0.08)

14.80 26-Apr-49

10.50

10.05

(0.10)

12.98 27-Mar-50

10.55

10.10

(0.20)


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Treasury Bills

The recent weakness seen in the OMO market cooled during today's trading, as bids for the long-dated papers strengthened following a slight improvement in system liquidity. The January 2022 papers saw reduced selling pressure from offshore parties despite improved bids from local banks. On the NTB aisle, we noted some wholesale demand for the October papers which traded close to the 1.00% mark. Yields remained unchanged across the benchmark bills curves D/D.

 

With supply expected from the CBN in form of OMO auctions for tomorrow, we expect a cautious market as participants look to see if the Apex bank makes a move to increase its stop rates in line with secondary market trading levels.

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 03/02/21

6.00

0.03

0.00

NGOMOB 0 05/11/21

6.50

0.03

0.00

NGOMOB 0 06/08/21

6.50

0.04

0.00

NGOMOB 0 08/10/21

6.50

0.04

0.00

NGOMOB 0 09/07/21

7.00

0.04

0.00

NGOMOB 0 10/19/21

8.00

0.05

0.00

NGOMOB 0 11/02/21

8.00

0.05

0.00

NGOMOB 0 12/07/21

8.00

0.05

0.00

NGOMOB 0 01/13//22

8.00

0.05

0.00

  

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 02/11/21

6.00

0.03

0.00

NIGTB 0 03/11/21

6.00

0.03

0.00

NIGTB 0 04/29/21

6.00

0.03

0.00

NIGTB 0 05/13/21

6.50

0.03

0.00

NIGTB 0 06/10/21

6.50

0.04

0.00

NIGTB 0 07/01/21

6.50

0.04

0.00

NIGTB 0 08/26/21

6.75

0.04

0.00

NIGTB 0 09/09/21

6.75

0.04

0.00

NIGTB 0 10/14/21

8.00

0.05

0.00

NIGTB  0 11/11/21

7.00

0.05

0.00

NIGTB  0 01/11/22

8.00

0.05

0.00

NIGTB 0 02/11/21

6.00

0.03

0.00

NIGTB 0 03/11/21

6.00

0.03

0.00

 


Money Markets

The interbank system liquidity improved slightly, opening 1.72% higher at c.N229.50Bn. Despite this, we saw OBB and OVN rates close higher at 11.25% and 11.50% respectively.

 

We expect rates to remain pressured as system outflows from the expected OMO and FX Retail Auctions deplete system liquidity.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

11.25

9.50

Overnight (O/N)

11.50

9.67

 


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FX Market

The FX market stayed very quiet for the most part of the trading session with rates staying unchanged across the different market segments except at the IEFX market where the Naira depreciated by 0.50k closing the day at N395.50/$ following a 26% drop D/D in traded volumes in that space.


FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

395.50

395.00

Cash Market

476.50

476.50

Transfer Market

489.00

489.00

 


Eurobonds 


At NGERIA Sovereign space, we saw continued demand interests as global crude oil prices consolidated recent gains. Although the market had a pretty quiet session, we saw yields compressed slightly by an average of c.2bps across the curve.

 

The NGERIA Corps also had a quiet session, while the only movement seen amongst the tracked papers was on ACCESS 2021s and UBANL 2022s which weakened by c.25bps and c.100bps respectively.


Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd. 

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