Local Demand Returns Into The Bond Market As Yields Continue To Compress

Proshare

Tuesday, August 11, 2020 / 5:51 AM / By Zedcrest Capital / Header Image Credit: Knowledge Wharton


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The FGN bond market kicked off a new week on a very drab note but picking slightly towards the end of the session. Much of today's activities focused on the auction bonds and some benchmark bonds; 2034s and 2049s papers in particular. Few trades settled around 9.85% for the 2034s while the 2049s saw high and lows of 9.95% and 9.88%, trading within this range.

The 2050s remained largely bided with very few offers available to match for the trade. The earlier hours of the day started with its quote opening wide at 10.10%/9.80% but squeezed slightly towards the end of the trading session as the few transactions sealed settled around 9.90%. By and large, yield compressed by an average of c.14bps across the yields curve.

For tomorrow, we expect activities to continue to pick especially at the tail of the curve as more local investors continue to show interest in long-dated bonds.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

5.00

2.80

0.00

 

12.75 27-Apr-23

7.05

4.20

0.00

 

14.20 14-Mar-24

7.10

4.50

0.00

 

13.53 23-Mar-25

7.50

5.15

0.00

 

12.50 22-Jan-26

7.50

6.65

(0.50)

 

16.29 17-Mar-27

8.20

7.55

(0.65)

 

13.98 23-Feb-28

8.35

7.70

(0.40)

 

14.55 26-Apr-29

9.45

8.20

0.00

 

12.15 18-Jul-34

10.05

9.00

0.00

 

12.40 18-Mar-36

10.10

8.90

0.00

 

16.2499 18-Apr-37

10.00

9.65

(0.15)

 

14.80 26-Apr-49

10.08

9.90

0.00

 

 

Treasury Bills

At the OMO bills space, trade volumes continue to dwindle with the few trades seen largely client-driven. We noted a bit of interest in the longer-dated bills May, June, and July papers as the May/June bill started off the day around 4.40% levels but dropped by 15bps to close the day at 4.25% on the offer. The July bills were offered better with most of its trading settling around 4.85%.

The NTB space, also traded on a very light note large driven by retail-orders who cherry-picked on few May bills offered better than its pairs

For tomorrow, market activities are expected to continue to trade on this sluggish note while interest may remain for longer-dated OMO bills.

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 8/13/2020

5.00

0.01

1.00

NGOMO 9/3/2020

5.50

0.01

1.00

NGOMO 10/1/2020

5.50

0.01

1.00

NGOMO 11/03/2020

6.00

0.01

1.00

NGOMO 12/01/2020

6.00

0.01

1.00

NGOMO 02/02/2021

6.50

1.00

0.50

NGOMOB 0 03/02/21

7.00

1.00

1.00

NGOMOB 0 03/02/21

7.00

1.00

1.00

NGOMOB 0 05/11/21

7.00

1.00

1.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

3.00

0.01

0.50

NIGTB 11/12/2020

3.00

0.01

0.00

NIGTB 01/14/2021

3.50

0.10

0.50

NIGTB 02/11/2021

3.50

0.10

0.00

NIGTB 04/29/2021

4.00

0.10

0.50

NIGTB 05/13/21

4.00

0.10

0.00

NIGTB 06/10/21

4.00

0.10

0.00

 

Money Markets

Interbank rates continued to drop, plunging by an average c.15% to open the week. System liquidity opened at c.N182.07BN positive, and with no significant funding pressures on the day, interbank rates closed the day in the single-digit corridor for OBB and OVN rates at 5.25% and 6.13% respectively.
With no significant funding pressures, we expect the market to trade around this level in interbank session tomorrow.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.25

6.33

Overnight (O/N)

6.13

7.17

 

FX Market

Transaction volumes remained very weak in the IEFX window, with very low volumes passing through the market albeit the Naira appreciate by N0.50k. Most banks remained bided for the most part of the trading session between N383.00/$ and N387.00/$ while all other markets segments remained stable compared to Friday's closing.

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

381.00

381.00

CBN SMIS

380.69

380.69

I&E FX Window

385.50

386.00

Cash Market

473.00

473.00

Transfer Market

475.00

475.00

 

Eurobonds

The NGERIA Sovereigns opened the new week on a weaker note with less aggressive bids shown across the curve following the rebound in oil prices last week. The 2025s and 2049s papers were the greatest losers across the sovereign curve as locals showed no interest in papers offered better, compared to the market, at the belly and tail of the curve. Consequently, we saw yields expand on an average of c.2bps across the curve.

 

The NGERIA Corps also had a quiet session albeit large movement in yield for the SEPPLN 22s which compressed by c.45bps compared to Friday's closing.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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