OMO AUCTION: CBN Drops Rate Across all Tenors, with the 362-DTM Closing at 13.00%

Proshare

Friday, February 28, 2020 / 1:13 PM / By Zedcrest Capital / Header Image Credit: BusinessDay

 

Below are highlights of trading activities in the fixed income and forex market on February 27, 2020

 

FGN Bonds

The Bond Market traded on a bullish trend, as demand was seen across the curve. The mid- to long-end of the bond curve (2029s, 2034s &2049s) saw the most activity, as month-end profit-taking was matched by aggressive demand from local investors. Yields dipped by c.11bps across the benchmark bond curve.


We expect to see sustained demand in tomorrow's session, as local players still have excess funds at their disposal.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

6.72

6.01

(0.05)

 

16.39 27-Jan-22

6.21

5.21

(0.04)

 

12.75 27-Apr-23

7.16

6.77

(0.01)

 

14.20 14-Mar-24

7.59

7.28

(0.55)

 

13.53 23-Mar-25

8.05

6.48

(0.09)

 

12.50 22-Jan-26

9.08

8.62

0.08

 

16.29 17-Mar-27

9.96

9.45

(0.12)

 

13.98 23-Feb-28

10.08

9.75

(0.05)

 

12.15 18-Jul-34

10.45

10.14

0.00

 

12.40 18-Mar-36

10.34

10.20

(0.29)

 

16.2499 18-Apr-37

10.62

10.15

(0.19)

 

14.80 26-Apr-49

12.00

11.93

0.01

 

 


Treasury Bills

The Treasury Bills market traded on a calm note, with slight bullish activity seen across the OMO curve. With c.N920bn flowing into the system, today's market didn't feel the aggressive bullish sentiment as expected, with most consummated deals at the long-end of the OMO curve. After the floating of an OMO auction, we saw rates increase slightly, as market players looked to supply from the auction, at higher yields.  Yields expanded by an average of c.6bps across the benchmark OMO curve.


At the OMO auction, the apex bank sold a total of c.N480bn across the three tenors on offer, with stop rates dropping by 1bp, 3bps and 2bps on the 89-DTM (11.44%), 180-DTM (11.56%) and 362-DTM (13.02%) respectively.


The NTB side slightly improved, as we saw a decent demand of the newly issued 1-year PMA, with most offers at 4.70%, a c.100bps from yesterday's stop rate.


We expect a lot of buy-interest in OMO auction bills in tomorrow's session, as investors look to the secondary market to reinvest their excess cash.

  

OMO  - 27 February 2020

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

89 day

11.44

20.00

8.95

3.11

180 day

11.56

30.00

1.36

0.47

362 day

13.00

350.00

534.92

476.42

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

11.50

7.00

0.50

NGOMO 2-Apr-20

11.00

8.00

0.00

NGOMO 14-May-20

11.25

8.90

0.25

NGOMO 4-Jun-20

11.50

7.00

0.50

NGOMO 2-Jul-20

11.65

7.00

0.40

NGOMO 13-Aug-20

11.10

10.65

(0.40)

NGOMO 3-Sep-20

11.15

10.95

(0.35)

NGOMO 1-Oct-20

11.80

10.75

0.15

NGOMO 3-Nov-20

12.00

10.75

0.25

NGOMO 1-Dec-20

11.80

10.75

0.05

NGOMO 5-Jan-21

11.10

11.00

(0.60)

NGOMO 02-Feb-21

11.90

11.00

0.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

5.00

1.00

0.00

NIGTB 2-Jul-20

6.00

1.00

0.00

NIGTB 1-Oct-20

7.00

1.00

0.00

NIGTB 14-Jan-21

7.00

1.00

0.00

NIGTB 11-Feb-21

7.00

4.15

0.00

                                                                          


Money Market

System liquidity opened at c.N1.06trn positive, which was substantially influenced by the c.N927bn of maturing OMO bills flowing into the system. OBB and OVN closed the day lower at 2.00% and 2.50% respectively, as rates dropping by c.40bps D/D, despite the floating of an OMO auction.

 

We expect rates to slightly increase, but still remain at single-digit figures, as most banks make funding provision for FX Retail Debit, which is estimated to be c.N270bn.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

2.00

2.40

Overnight (O/N)

2.50

2.90

 


FX Market

At the Interbank, the Naira/USD spot and SMIS rate remained unchanged at N306.95/$ and N358.51/$ respectively. The Naira significantly depreciated at the I&E FX window, gaining 70k to close at N365.22/$.


The parallel market, the cash and transfer rate remained unchanged at N358.30/$ and N367.00/$ respectively.

  

FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.51

358.51

I&E FX Window

365.22

364.52

Cash Market

358.30

358.30

Transfer Market

367.00

367.00

 

Eurobond

As the Coronavirus epidemic grows worse, it continues to be the main driver fueling the bearish sentiment witnessed in the NGERIA Sovereign tickers, as investors continue to exit their positions across the sovereign yield curve. This was further enhanced by continuous dwindling of crude oil prices which stands at $51.04bp (at the time of this report). Yields expanded by c.22bps across the sovereign yield curve.


The NGERIA Corps tickers traded on bullish sentiment, with yields on the ACCESS 2021s and FIDBAN 2022s rallied dropping by c.4bps and c.2bps respectively. With crude oil prices dropping, the SEPLLN 2023s was significantly weakened by a c.15bp D/D movement.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
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