| Bonds & Fixed Income |    546 VIEWS  |
| Bonds & Fixed Income | |
| 546 VIEWS | |
 |
Tuesday, March 31, 2020 / 9:03 PM / Zedcrest Capital / Header Image Credit: China Daily
Below are highlights of trading activities in the fixed income and forex market on March 31, 2020
FGN Bonds
Activity in the Bonds Market picked
up in the second trading session of the week, as market participants settled
down into remote trading following the shutdown of the country's two major
states. Investors kept their attention at the belly of the curve, mostly the
2027s and 2028s maturities, with scarce offers struggling to fill client
demand. We also noted a few trades executed at the tail end of the curve, most
especially the 2037s. Yields compressed by an average of c.4bps across the
benchmark bond curve.
We expect the bond curve to
remain flat in the short term, as the market direction remains unclear. We
expect pockets of demand to persist from local investors as they look to
reinvest maturating funds.
|
Benchmark FGN Bonds |
||||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
|
14.50 15-Jul-21 |
7.81 |
5.35 |
(0.01) |
|
|
16.39 27-Jan-22 |
9.17 |
6.33 |
0.10 |
|
|
12.75 27-Apr-23 |
11.55 |
10.15 |
0.00 |
|
|
14.20 14-Mar-24 |
11.61 |
10.94 |
0.00 |
|
|
13.53 23-Mar-25 |
12.42 |
11.34 |
0.04 |
|
|
12.50 22-Jan-26 |
12.56 |
12.22 |
(0.12) |
|
|
16.29 17-Mar-27 |
12.75 |
12.33 |
0.00 |
|
|
13.98 23-Feb-28 |
12.94 |
12.55 |
(0.10) |
|
|
14.55 26-Apr-29 |
12.89 |
12.48 |
(0.18) |
|
|
12.15 18-Jul-34 |
13.08 |
12.52 |
0.00 |
|
|
12.40 18-Mar-36 |
13.00 |
12.53 |
(0.12) |
|
|
16.2499 18-Apr-37 |
13.13 |
12.74 |
(0.13) |
|
|
14.80 26-Apr-49 |
13.18 |
12.81 |
0.00 |
|
Treasury Bills
The Treasury Bills market also
got an adrenaline shot of activity, as banks looked to invest liquidity off the
back of the CRR refund (c.N310bn) received from the CBN. Demand was persistent
for mid- to long-dated maturities, driving rates further down by as much as
15bps. Yields however compressed by an average of c.45bps across the OMO curve.
The NTBs traded on a quiet note,
with very little volumes passed. Bids retreated at the short end of the NTB
benchmark curve, as the market gears up for the NTB auction coming up tomorrow.
Yields rose by an average of c.132bps across the benchmark NTB curve.
We expect demand for OMO bills to
persist for the remainder of the trading week, supported by buoyant system
liquidity as well as incoming OMO maturities. NTB flows are expected to remain
low, as the bi-weekly PMA tomorrow takes center stage.
|
Primary Market Auction Expectation |
|||
|
NTB - 01
April 2020 |
|||
|
Tenor |
Offer (N'bn) |
Expected Rate (%) |
Previous Rate (%) |
|
91 days |
10.00 |
2.00 - 2.60 |
2.30 |
|
182 days |
17.60 |
3.20 - 3.80 |
3.40 |
|
364 days |
68.08 |
4.30 - 5.50 |
4.60 |
|
Benchmark OMO Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
NGOMO 5/14/2020 |
13.00 |
11.50 |
0.75 |
|
NGOMO 6/4/2020 |
15.00 |
11.00 |
0.00 |
|
NGOMO 7/2/2020 |
15.00 |
11.00 |
0.00 |
|
NGOMO 8/13/2020 |
13.00 |
11.00 |
(0.20) |
|
NGOMO 9/3/2020 |
12.80 |
12.00 |
(0.45) |
|
NGOMO 10/1/2020 |
15.00 |
12.00 |
0.00 |
|
NGOMO 11/03/2020 |
14.00 |
12.00 |
(0.20) |
|
NGOMO 12/01/2020 |
15.00 |
13.60 |
0.00 |
|
NGOMO 01/05/2021 |
13.95 |
13.65 |
(0.15) |
|
NGOMO 02/02/2021 |
13.95 |
13.65 |
(0.15) |
|
NGOMOB 0 03/02/21 |
13.85 |
13.50 |
(0.15) |
|
Benchmark NTBills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
NIGTB 2-Jul-20 |
5.50 |
1.00 |
2.50 |
|
NIGTB 1-Oct-20 |
6.00 |
1.75 |
2.25 |
|
NIGTB 12-Nov-20 |
6.00 |
2.00 |
2.00 |
|
NIGTB 14-Jan-21 |
6.00 |
2.00 |
0.00 |
|
NIGTB 11-Feb-21 |
15.00 |
11.00 |
0.00 |
Money Market
Interbank
Money Market rates dropped today, as the system liquidity opened at c.N412bn
positive. This 119% increase was due to the CRR adjustment done by the CBN
closing yesterday, which was effectively a net inflow of c.N310bn. OBB and OVN rates
dropped by c.600bps on the average, to close at 8.50% and 9.83% respectively.
We
expect rates to remain sub 10.00% for most of the week, as the CBN takes
preference CRR over OMO auctions to manage excess system liquidity levels.
|
Money Market Rates |
||
|
|
Current (%) |
Previous (%) |
|
Open Buy Back (OBB) |
8.50 |
14.83 |
|
Overnight (O/N) |
9.83 |
15.33 |
FX Market
The Naira made
gains against the greenback in today's trading session, appreciating by c.1.70%
to close at N385.55/$ with traded volumes of c.$80m also up by 133% D/D. The
CBN official Spot and SMIS rates remained unchanged at N361.00/$ and N358.51/$
respectively.
The Naira
continued its slide at the parallel market, depreciating further by N3 and N8
to close at N412.00/$ and N428.00/$ as supply continues to dry up in light of
the lockdown of Lagos and Abuja.
|
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
|
|
CBN Spot |
361.00 |
361.00 |
|
CBN SMIS |
358.51 |
358.51 |
|
I&E FX Window |
385.55 |
392.18 |
|
Cash Market |
412.00 |
409.00 |
|
Transfer Market |
428.00 |
420.00 |
Eurobond
Volatility
in the NGERIA Sovereign tickers continued to persist, as the fall in global oil prices
continues to negatively impact the country's sovereign revenues. Yields
expanded by an average of c.3bps across the sovereign yield curve, despite
gains seen at the belly of the curve (the 2030s to 2032 maturities). We expect
local investors to provide support for the sovereign papers as they provide
higher yields than their local counterparts.
The
NGERIA Corps tickers continue to
trade flat, as investors stay risk-off on the tracked papers. The SEPLLN 2023s
posted some gains, dropping by gaining 8bps D/D.
1.
Axxela Funding 1
Plc - Up to N10bn Series 1 Bonds Is Now Open
2.
Bearish
Performance Reversed as Average Yield Dips 32bps WoW to 3.7%
3.
A More
Challenging Auction for the DMO in March 2020
4.
Summary of FGN
Bond Auction Results For March 2020
5.
Somber Day in
the Fixed Income Space as the MPC Maintains Rates across All Boards
6.
ACCESS Publishes
2020 Green Bond Impact Report
7.
Somber Day in
the Fixed Income Space as the MPC Maintains Rates across All Boards
8.
Quiet Bond
Market as COVID-19 Fears Creates Uncertainty Among Investors
9.
DANGCEM Notifies
of Intention To Issue Maiden Bonds
10.
Average NT-Bills
Yield Rises to 4.0% Amidst Mixed Investors' Sentiments; UCAP Plc CP Available
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