Money Market Rates Close The Week Higher as Retail FX Take Out Liquidity

Proshare

Sunday, October 13, 2019   /  08:34 PM  / By Zedcrest Capital / Header Image Credit: India Filings

 

Below are highlights of trading activities in the fixed income and forex market on October 11, 2019

 

Bonds

Activity in the Bond Market improved in the final trade session of the week. Yields at the short-end of the curve repriced lower but with little volumes passed, as investors evaluate available yields against the backdrop of reduced rates on OMO bills. We noted improved demand trades at mid-end of the curve, most notably the non-benchmark 10-year (2029s) which trades at 14.30% levels. Yields across the benchmark bond curve remained unchanged to close the week.

We expect improved demand in the short term to be skewed towards the short- to mid-end of the curve in light of depressed yields available on money market securities.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.23

13.47

(0.10)

16.39 27-Jan-22

14.16

13.73

(0.02)

12.75 27-Apr-23

14.40

14.30

0.00

14.20 14-Mar-24

14.19

13.73

0.03

13.53 23-Mar-25

14.24

14.06

0.00

12.50 22-Jan-26

14.38

14.29

0.04

16.29 17-Mar-27

14.28

14.13

0.00

13.98 23-Feb-28

14.40

14.28

0.04

12.15 18-Jul-34

14.53

14.33

0.00

12.40 18-Mar-36

14.54

14.32

0.00

16.2499 18-Apr-37

14.57

14.46

0.02

14.80 26-Apr-49

14.67

14.61

0.00


Source: Zedcrest Dealing Desk


 

Treasury Bills

The T-bill market closed the week on an active note, with different trade interests seen at both ends of the NTBills curve. We noted increased sell-offs on short-dated maturities as market participants offloaded bills to fund for the bi-weekly Retail FX auction debits.

Demand was however sustained at the long-end of the NTBills curve, with the most activity noted on the newly issued 1-year Treasury bill (8-Oct-20) which closed c.90bps lower than the stop-rate from the previous day's auction.

With supply expected from an NTB auction and possible OMO auction(s) in the coming week, we expect stop rates to close even lower due to strong demand for yields at the primary markets by investors.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Nov-19

11.70

11.00

1.20

5-Dec-19

11.80

10.50

1.20

2-Jan-20

12.18

11.50

0.43

6-Feb-20

12.25

11.50

(0.25)

19-Mar-20

12.00

11.00

(0.45)

2-Apr-20

12.30

11.55

0.55

14-May-20

12.45

12.00

0.05

04-Jun-20

12.10

11.60

(0.90)

02-Jul-20

12.50

12.15

(0.45)

13-Aug-20

12.95

12.25

0.15

3-Sep-20

12.95

12.25

(0.05)

1-Oct-20

12.90

12.20

0.10

Source: Zedcrest Dealing Desk

 

Money Market

Money market rates went up by an average of c.680bps to close the week, as Retail FX debits took out liquidity from the system. OBB and OVN rates closed today at 11.43% and 12.43% respectively.

We expect rates to open the coming week even higher as Whole FX auction debits further deplete system liquidity. Rates should moderate lower later in the week as OMO maturities of c.N463bn hit.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

11.43

4.71

Overnight (O/N)

12.43

5.50

Source: FMDQ, Zedcrest

 

FX Market

At the interbank, the Naira/USD spot and SMIS rates remained stable to close the week at N306.95/$ and N358.13/$ respectively. At the I&E window, the closing rate for the Naira appreciated by 33k to close at N362.13/$.

The cash and transfer rates at the parallel markets remained relatively stable, closing at N358.00/$ and N362.50/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.13

358.13

I&E FX Window

362.13

362.46

Cash Market

358.00

357.80

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 

Eurobonds

The NGERIA Sovereigns saw some respite as yields reversed some losses from earlier in the week. Yields dropped by an average of c.3bps across the sovereign curve as global oil prices strengthened on hopes of easing US-China trade tension as well as a missile attack on Iranian oil tankers. 

The NIGERIA Corps has a quieter session, with some select papers showing some weakness to close the week.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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