Market Players Place Bullish Bets on FGN Bonds Ahead of MPC

Proshare

Monday, July 22, 2019   /  08:00AM  /  Zedcrest Capital 


The FGN Bond market traded on a significantly bullish note, with yields lower by c.20bps on the day, as coupon payments on the FGN 2026 bond further boosted demand interests, whilst market players maintained a firm bullish bias ahead of the CBN’s interest rate decision tomorrow.

Below are the highlights of trading activities in the Fixed Income and Forex Market today. 

 

Bonds

Activities in the FGN bond market were bullish today. We expect yields to remain depressed in tomorrow’s session, with Coupon payment on the FGN 2030 bond expected to further bolster demand interests.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

13.02

12.38

(0.62)

16.39 27-Jan-22

13.49

12.66

(0.50)

12.75 27-Apr-23

13.52

13.08

(0.26)

14.20 14-Mar-24

13.72

13.13

(0.02)

13.53 23-Mar-25

13.59

12.76

(0.19)

12.50 22-Jan-26

14.01

13.50

0.00

16.29 17-Mar-27

13.79

13.66

(0.25)

13.98 23-Feb-28

13.77

13.58

0.02

12.15 18-Jul-34

14.00

13.93

(0.19)

12.40 18-Mar-36

14.13

13.96

(0.10)

16.2499 18-Apr-37

14.14

13.93

(0.06)

14.80 26-Apr-49

14.10

14.02

(0.20)


Source: Zedcrest Dealing Desk


Treasury Bills

The T-bills market remained slightly bullish, with yields lower by c.9bps on the day. Demand interests were however slightly subdued on the back of the squeeze in system liquidity from the Wholesale FX sale by the CBN. 

We expect rates to remain relatively stable as market players maintain a cautious trading stance at current low yield levels. 

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Aug-19

9.70

5.00

0.20

12-Sep-19

9.90

9.00

(0.20)

3-Oct-19

10.15

8.50

(0.35)

14-Nov-19

10.15

10.00

(0.70)

5-Dec-19

11.00

10.35

0.00

2-Jan-20

11.00

10.50

0.40

6-Feb-20

11.00

10.50

(0.10)

19-Mar-20

11.00

10.60

(0.10)

2-Apr-20

11.00

10.75

(0.10)

14-May-20

11.10

10.80

0.00

04-Jun-20

11.10

10.60

0.00

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market spiked by c.10pct as system liquidity was drained by the c.N75bn wholesale FX sale by the CBN. The OBB and OVN rate consequently ended the session at 19.57% and 21.14%, with system liquidity currently estimated at c.N5bn negative. 

We expect rates to ease lower tomorrow, as banks gain access to the CBN’s SLF window for their funding needs.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

19.57

11.93

Overnight (O/N)

21.14

12.64

Source: FMDQ, Zedcrest 

 

FX Market

At the interbank, the Naira/USD rate fell by 5k to N306.95/$ at the spot market, while the SMIS rate remained unchanged at 357.52/$. The NAFEX closing rate at the I&E window was marginally higher by 2k to N361.48/$, whilst the market turnover dipped by c.60% to $90m. At the parallel market, the cash and transfer rates remained stable at N357.50/$ and N361.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.90

306.95

CBN SMIS

357.70

357.70

I&E FX Window

361.48

361.46

Cash Market

357.50

357.50

Transfer Market

361.50

361.50

Source: CBN, FMDQ, REXEL BDC 

 

Eurobonds

The NGERIA Sovereigns remained stable, with yields relatively unchanged on the day.

 

In the NGERIA Corps, we witnessed sustained demand interests on the ACCESS 2021 and ETINL 2024. A total amount of $450m would be repaid to the FBNNL 2021 bond holders tomorrow, following the call announced on the 17th of June 2019 and effective 23rd July 2019.

 

 

Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

Related News

 1.       Average Yield Pressured to 10.5% on Sustained Demand Buoyed by Robust System Liquidity

2.       Bond Yields Retrace Higher Following Q3 FGN Bond Calendar Release

3.       Invest in FGN Monthly Bond Auction – July 2019

4.       NAFEX Rate Trends Higher as Offshores Take Profit on Bills

5.       Bond Yields Trend Lower as Market Players Re-Invest Coupon Inflows

6.       CBN Treasury Bill Auction Scheduled For July 17th, 2019

7.       Offshore Investors Rally 10-Year Bond following Decline in CPI Inflation

8.      Average Money Market Rate Went Down By 1.65% To Settle At 2.57% From 4.22%

9.       Bullish Momentum Sustained as Average T-Bills Yield Contracts 80bps to 11.1%

10.   Coupon Payments to Sustain Demand Interests on FGN Bonds


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP