Money Market Rates Hit A 3-week High, As CBN Drains Liquidity Via Wholesale FX Auction

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Tuesday, October 15, 2019 / 10:43 AM / By Zedcrest Capital / Header Image Credit: Caixin Global



Money market rates shoot up by an average of c.350bps to close at 3-week highs at the end of the trading session, as market participants provided for FX Wholesale Auction debits. Despite reaching intraday highs of 25%, OBB and OVN rates closed today at 16.00% and 16.79% respectively. 

Below are highlights of trading activities in the fixed income and forex market on October 14, 2019


Bonds

The Bond market opened the week on an active note, with bullish sentiments witnessed across the yield curve. We noted improved volumes being crossed, most notably the 2027s and 2034s maturities, as yields dropped by an average of c.1bps across the benchmark yield curve.

 

We expect a cautious open to the trading session tomorrow as market participants look to the outcome of the September 2019 CPI/Inflation due to be released by the Nigerian Bureau of Statistics to determine market direction.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.30

13.47

0.07

16.39 27-Jan-22

14.15

11.73

(0.01)

12.75 27-Apr-23

14.38

14.30

(0.02)

14.20 14-Mar-24

14.18

13.73

(0.01)

13.53 23-Mar-25

14.24

14.06

0.00

12.50 22-Jan-26

14.38

14.31

0.00

16.29 17-Mar-27

14.27

14.13

(0.01)

13.98 23-Feb-28

14.39

14.30

(0.01)

12.15 18-Jul-34

14.53

14.40

0.00  

12.40 18-Mar-36

14.53

14.44

(0.01)

16.2499 18-Apr-37

14.55

14.45

(0.02)

14.80 26-Apr-49

14.67

14.61

0.00


Source: Zedcrest Dealing Desk


Treasury Bills

The Nigerian T-bills market started the week on bearish note especially on the short- to mid-end of the NTBills curve. Yields inched higher by an average of c.39bps across the benchmark NTBills curve, as market participants faced funding pressures for the FX wholesale auction debits. We noted continued demand however for long-dated maturities, most notably the 24-Sept-20 & 8-0ct-20 maturities.

 

We expect the sell-off to cool in tomorrow's session, as funding pressures reduce and market participants take positions ahead of the Primary Market Auction slated for later in the week.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

14-Nov-19

12.30

11.00

0.60

5-Dec-19

12.30

10.50

0.50

2-Jan-20

12.50

10.80

0.32

6-Feb-20

12.50

11.00

0.25

19-Mar-20

12.50

11.00

0.50

2-Apr-20

12.50

11.25

0.20

14-May-20

12.80

11.55

0.35

04-Jun-20

12.50

11.25

0.40

02-Jul-20

12.85

12.15

0.35

13-Aug-20

12.85

12.25

(0.10)

3-Sep-20

12.85

12.25

(0.10)

1-Oct-20

12.85

12.35

(0.05)

Source: Zedcrest Dealing Desk

 

Money Market

Money market rates shoot up by an average of c.350bps to close at 3-week highs at the end of the trading session, as market participants provided for FX Wholesale Auction debits. Despite reaching intraday highs of 25%, OBB and OVN rates closed today at 16.00% and 16.79% respectively.

 

We expect rates to moderate in tomorrow's session as funding pressures ease and market participants benchmark funding rates to the Standard Lending Facility (SLF) rate of 15.50%.


                  Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

16.00

11.43

Overnight (O/N)

16.79

12.43

Source: FMDQ, Zedcrest

 

  

FX Market

The Naira/USD remained stable at the interbank, as the Naira/USD spot, SMIS rates and I&E FX window closing rates remained unchanged from the previous week's close.

The cash and transfer rates at the parallel markets also remained 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

362.13

Cash Market

358.00

358.00

Transfer Market

362.50

362.50

Source: CBN, FMDQ, REXEL BDC

 


Eurobonds


The NGERIA Sovereigns had a quiet trade session, with little activity today witnessed. Yields across the sovereign curve remained unchanged from last week's close, as the markets shrugged off a 0.87% dip in Brent crude prices.  

 

The NIGERIA Corps had a more active session, we noted improved demand for the shorter-dated papers, the especially the ACCESS 2021, which dropped c.7bps.


Proshare Nigeria Pvt. Ltd.



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