Market Prices in Expectations Ahead of The FGN Bond Auction Scheduled for This Week

Proshare

Tuesday, April 20, 2021 / 09:40 AM / By Zedcrest Capital Header Image Credit: Getty Images


Proshare Nigeria Pvt. Ltd.

 

FGN Bonds

The FGN Bond market opened the week on a quiet note, as investors showed little or no interest in the secondary market as the monthly FGN bond auction approaches. We saw bids camped high at the short- to mid-end of the bond curve, with trades seen on the FGN 2027s paper trading hands at 12.25% levels. At the long end of the curve, we saw improved bids from short-covering trades as bids on the 2045s to 2050s papers compressed by c.10bos on the average. Consequently, yields compressed by c.02bps on the average across the benchmark curve.

 

We expect a calm trading session tomorrow, and market participants maintain their focus on the coming FGN bond auction scheduled for Wednesday.

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

9.15

7.00

0.00

14.20 14-Mar-24

10.00

7.30

0.00

13.53 23-Mar-25

10.50

8.90

0.00

12.50 22-Jan-26

12.20

11.50

0.00

16.29 17-Mar-27

12.50

11.95

0.00

13.98 23-Feb-28

12.70

11.95

0.00

14.55 26-Apr-29

12.85

11.90

0.00

12.15 18-Jul-34

13.40

13.00

0.00

12.50 27-Mar-35

13.40

13.00

0.00

12.40 18-Mar-36

13.45

12.80

0.00

16.2499 18-Apr-37

13.45

12.90

0.00

9.80 24-Jul-45

13.85

13.60

(0.10)

14.80 26-Apr-49

13.90

13.65

(0.10)

12.98 27-Mar-50

13.90

13.60

(0.10)

 

Treasury Bills

It was a tale of two halves in the treasury bills space today with buying interests on the short- and mid-dated NT-bills by institutional investors, with local banks looking to sell holdings in OMO securities (especially long-dated papers) but with little interests shown. We saw the September NTB papers change hands in wholesale sizes at 3.60% levels, while the long-dated OMOs were offered at 8.50% levels, too low for bids stuck at 8.80% levels.

 

We expect to see some order-driven demand tomorrow as market participants cherry-pick on OMO T-bills offered at attractive levels, especially at the tail of the curve.

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 05/11/21

10.00

0.05

0.00

NGOMOB 0 06/08/21

10.00

0.05

0.00

NGOMOB 0 08/10/21

10.00

0.10

0.00

NGOMOB 0 09/07/21

9.00

0.10

0.00

NGOMOB 0 10/19/21

10.00

0.10

0.00

NGOMOB 0 11/02/21

10.00

0.20

0.00

NGOMOB 0 12/07/21

11.00

0.20

0.00

NGOMOB 0 01/11/22

11.00

0.20

0.00

NGOMOB 0 02/01/22

12.00

0.20

0.00

NGOMOB 0 03/01/22

12.00

0.20

0.00

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 04/29/21

7.00

0.05

0.00

NIGTB 0 05/13/21

9.00

0.05

0.00

NIGTB 0 06/10/21

8.00

0.05

0.00

NIGTB 0 07/01/21

9.00

0.05

0.00

NIGTB 0 08/26/21

9.00

0.10

0.00

NIGTB 0 09/09/21

9.00

0.10

0.00

NIGTB 0 10/14/21

9.00

0.10

0.00

NIGTB 0 11/11/21

10.00

0.20

0.00

NIGTB 0 01/13/22

10.00

0.20

0.00

NIGTB 0 02/10/22

11.00

0.20

0.00

 


Money Markets

Interbank Money Market rates opened the week lower than the previous week's close, as local banks took advantage of the CBN lending windows (SLF and TRF) to reduce their funding costs. We saw Open Buy-Back (OBB) and Overnight (O/N) rates close lower by 1429bps on average, closing the session at 12.25% and 12.50% respectfully.

 

The Central Bank of Nigeria released its revised guidelines for its CBN Standing facilities, with some changes to the timing for access to the Standing Lending and Term Lending Facilities to the end of the trading day (between 5.00 to 6.30 PM) for same-day value. With these changes, we expect pressure to increase on local banks looking for intraday funding of their positions and as such upward movement in money market rates.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.25

25.00

Overnight (O/N)

12.50

28.33

 

FX Market

Trading activity in the I&E FX market picked off right where the previous week closed, with traded volumes up by 13% ($69.71mio traded) D/D. The bid range remained stable, with rates ranging between N399.00/$ and N437.41/$.  The closing rate appreciated by an additional N0.17k to close at N410.33/$.

 

The Naira also appreciated at the parallel market by N3.00K as the transfer rate improved to close at N495.40/$ (0.60% appreciated D/D) while the cash rate remained stable at N480.00/$.

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

410.33

410.50

Cash Market

480.00

480.00

Transfer Market

495.40

498.40

 


Eurobonds

The NIGERIA Sovereigns resumed their bullish ride for a second consecutive session as investor flows resumed back into the sovereign curve. We saw less aggressive offers across the sovereign curve, with the largest movements seen on the mid and long-dated bonds causing yields to compress by an average of c.3bps D/D.

 

Although we saw slight demand, the NIGERIA Corporates was quiet with little yield movement, caused by the scarcity of some of these tracked papers.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


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