Low Liquidity Dents Market Appetite for Fixed Income Securities

Proshare

Tuesday, June 09, 2020 / 8:40 AM / By Zedcrest Capital / Header Image Credit: Investopedia


Proshare Nigeria Pvt. Ltd.


FGN Bonds

A rather shallow open to the new week with very few trades crossing through the bonds space partly triggered by liquidity squeeze in the interbank market. Yields were fairly stable on most of the benchmark maturities although we saw downward adjustment in market bid for some selected bonds, however very few transactions were consummated regardless of this adjustment. In all Yields compressed at an average of c.4bps across the benchmark curve.

We expect market to coast around this level with very thin trade passing through, since there are no significant Inflow expected in the interbank market to support trading activities.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.79

4.78

(0.02)

 

16.39 27-Jan-22

7.59

5.34

0.00

 

12.75 27-Apr-23

9.04

8.36

(0.08)

 

14.20 14-Mar-24

9.07

8.36

0.00

 

13.53 23-Mar-25

8.36

7.50

0.00

 

12.50 22-Jan-26

9.67

9.39

0.00

 

16.29 17-Mar-27

10.86

10.06

(0.18)

 

13.98 23-Feb-28

10.51

10.05

0.04

 

14.55 26-Apr-29

10.81

10.35

(0.32)

 

12.15 18-Jul-34

11.35

10.98

0.00

 

12.40 18-Mar-36

11.36

11.00

0.00

 

16.2499 18-Apr-37

11.34

10.98

0.00

 

14.80 26-Apr-49

12.25

12.00

(0.06)

 


Treasury Bills

Similar to the FGN bond market, the treasury Bills space (OMO and NTB) traded on a dull note although we still noted few interests for long dated bills (Jan-May Maturities). However, bid/ offer were widely dispersed making it very difficult to consummate the few trades seen for these maturities. Notable interest was seen for 05 Jan and 11 May bills which was priced at 5.80/5.30 and 5.70/5.30 respectively for most part of the trading session.

Market demand is expected to remain weak but with more bears who seek to raise short term funds for their daily activities due to less robust interbank market.

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOM 6/4/2020

4.00

0.10

1.00

NGOM 7/2/2020

7.00

1.50

0.00

NGOM 8/13/2020

7.00

1.50

(0.50)

NGOM 9/3/2020

7.00

1.50

(0.50)

NGOM 10/1/2020

7.50

1.50

(0.50)

NGOM 11/03/2020

7.50

1.50

(0.50)

NGOM 12/01/2020

8.00

1.50

(0.50)

NGOM 01/05/2021

8.00

1.50

2.00

NGOM 02/02/2021

6.10

1.50

0.10

NGOM 03/02/21

6.15

1.50

0.15

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

4.00

0.10

1.00

NIGTB 1-Oct-20

4.50

0.10

0.50

NIGTB 12-Nov-20

4.50

0.10

0.50

NIGTB 14-Jan-21

5.00

0.10

0.00

NIGTB 11-Feb-21

5.00

0.15

0.00

 

Money Markets

System liquidity opened the very low at approximately N85.08bn positive. Consequently, keeping OBB and OVN rates at double digit levels although slightly lower than Friday's closing. Market participants scrambled for fundings for daily activities and also MTN commercial paper that settled today, However OBB and OVN rates closed at 14.50% and 15.42% respectively.

Tomorrow, we expect interbank rates to remain at double digits due to the expected SUKUK Funding of 150bn set to impact the market.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

14.50

15.60

Overnight (O/N)

15.42

16.70

 

FX Market

The Naira depreciated at the I&E FX window, as low supply continued to wither the flow of transactions. Approximately $14.60m changed hands through this window, lowest seen in 2 months with most banks biding between 383/$ and 387/$.

All other rates remained unchanged as transaction levels stayed mute costing rates to remain stable in the FX market.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

387.33

386.70

Cash Market

447.00

447.00

Transfer Market

453.00

453.00


Eurobonds

The NGERIA Sovereign tickers opened the week on a bullish note, partly supported by improving crude oil price in the international market and increasing appetite to hold Nigeria's due to more positive future economic outlook than expected. Notable interest was seen from the mid to longer dated papers particularly the 2031s, Consequently, Yields compressed by c.34bps across the sovereign yield curve. 

The NGERIA Corps tickers maintained its mixed sentiment, with yields on the SEPPLN 2022s dropping by 15bps, while ZENITH 2022s expanded by 1bps, among most track papers.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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