Bonds & Fixed Income | |
Bonds & Fixed Income | |
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Friday, January 22, 2021 / 9:24 AM / By Zedcrest Capital / Header Image Credit: Dreamstime
FGN Bonds
The FGN
bond market remained bearish throughout the trading session as traders shrugged
off the results of yesterday's FGN Bond auction. The screen offers increased across all
benchmark bonds, adjusting to the auction stop rate level, while bids remained very
wide. However, towards the end of the trading session, we witnessed slight
demand on the 2024s and 2027s papers, with trades executed around 6.10% and
7.95%, respectively.
We do not
expect any significant change in market sentiments closing the week, albeit we
expect investors to continue to cherry-pick on bonds with attractive yields
ahead of coupon inflows anticipated in the coming week.
Benchmark FGN Bonds |
||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
16.39
27-Jan-22 |
3.85 |
1.14 |
(0.09) |
|
12.75 27-Apr-23 |
6.00 |
3.24 |
0.50 |
|
14.20
14-Mar-24 |
6.50 |
3.92 |
0.30 |
|
13.53
23-Mar-25 |
7.04 |
5.15 |
(0.01) |
|
12.50
22-Jan-26 |
7.61 |
6.34 |
(0.67) |
|
16.29
17-Mar-27 |
8.61 |
7.84 |
0.51 |
|
13.98
23-Feb-28 |
8.78 |
7.66 |
0.49 |
|
14.55
26-Apr-29 |
8.83 |
7.86 |
0.28 |
|
12.15
18-Jul-34 |
9.84 |
8.87 |
0.23 |
|
12.50
27-Mar-35 |
9.85 |
8.66 |
0.12 |
|
12.40
18-Mar-36 |
9.94 |
8.80 |
0.33 |
|
16.2499
18-Apr-37 |
10.00 |
8.85 |
0.48 |
|
9.80
24-Jul-45 |
10.13 |
8.44 |
0.22 |
|
14.80
26-Apr-49 |
10.23 |
9.00 |
0.00 |
|
12.98
27-Mar-50 |
10.26 |
8.95 |
0.00 |
|
Treasury Bills
The
treasury bills market was on snooze mode for most of the session due to the
CBN's OMO auction announcement. The surprise increase in the offer amount at
the OMO auction also induced a weary market, with offer volumes 100% higher
compared to the previous auction and the largest OMO auction since April 2020.
At the NTB space, we saw some order-driven demand for short and medium dated
bills with few trades crossed around 0.30% levels.
At the
OMO auction, the CBN issued a total of N170BN while maintaining rates across
the three tenors. Demand remained skewed towards the long-dated paper offered
(362-day) with a bid-to-cover ratio of c.4.38X, as foreign portfolio investors
hunt for the highest yield available.
We expect
a bearish session to close out the week. The CBN is likely to drain system
liquidity via various debits, while portfolio investors' profit-taking
activities are also presumed to support this sentiment.
OMO AUCTION RESULT |
||||||
OMO
- 21 Jan 2021 |
||||||
Tenor |
Rate
(%) |
Offer
(N'bn) |
Sub
(N'bn) |
Sale
(N'bn) |
Previous
Rate (%) |
Changes |
103
days |
1.5100 |
20.00 |
51.05 |
20.00 |
1.5100 |
0.0000 |
182
days |
4.3400 |
20.00 |
79.84 |
20.00 |
4.3400 |
0.0000 |
362
days |
5.7400 |
130.00 |
569.35 |
130.00 |
5.7400 |
0.0000 |
Benchmark OMO Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NGOMOB 0
02/02/21 |
8.00 |
0.03 |
0.00 |
NGOMOB 0
03/02/21 |
8.00 |
0.03 |
0.00 |
NGOMOB 0
05/11/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
06/08/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
08/10/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
09/07/21 |
8.00 |
0.04 |
0.00 |
NGOMOB 0
10/19/21 |
8.00 |
0.05 |
0.00 |
NGOMOB 0
11/02/21 |
8.00 |
0.05 |
0.00 |
NGOMOB 0
12/07/21 |
8.00 |
0.05 |
0.00 |
Benchmark NT-Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NIGTB 0
01/14/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
02/11/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
03/11/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0 04/29/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
05/13/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
06/10/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
07/01/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
08/26/21 |
8.00 |
0.04 |
0.00 |
NIGTB 0
09/09/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0
10/14/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0 11/11/21 |
8.00 |
0.05 |
0.00 |
NIGTB 0
01/14/21 |
8.00 |
0.03 |
0.00 |
NIGTB 0
02/11/21 |
8.00 |
0.03 |
0.00 |
Money Markets
OBB and Overnight rates remained
rooted at 1.00% despite the OMO auction funding of N170Bn made by local banks
today. System liquidity is estimated to close at c. N660Bn, boosted by late
receipt of FAAC inflows (c.300bn) credited at the close of business activity.
We expect a significant uptick in
funding rates tomorrow as outflows via FX Retail intervention, bond auction
winnings, and possibly CRR debits hit the banking system.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
1.00 |
0.50 |
Overnight (O/N) |
1.08 |
1.00 |
FX Market
Trading activity
in the interbank I&E market remained relatively active, although trading
volumes dropped slightly D/D by 14% ($77.04mio traded) with closing rates surprisingly
appreciating by N0.17k.
Rates in the
parallel market's cash and transfer segments also remained stable, closing the
day at N473.50/$1 and N486.00/$ respectively.
FX Market |
||
Current (N/$) |
Previous (N/$) |
|
CBN Spot |
379.00 |
379.00 |
CBN SMIS |
380.69 |
380.69 |
I&E FX Window |
394.00 |
394.17 |
Cash Market |
474.00 |
474.00 |
Transfer Market |
485.00 |
485.00 |
Eurobonds
It was a pretty calm session in the SSA Eurobond,
albeit we witnessed mild buy sentiments for sovereign debt papers. The NIGERIA
Sovereign curve rallied again by another c.6bps as investors continue to stay
in a full risk-on mode. The GHANAs and ANGOLAs also retained their gains on the
day, with yields declining by -c.8bps and -c.12bps, respectively.
The NIGERIA Corps had a relatively quiet session as
well, albeit most of the tracked papers moved in opposite directions while the
largest movement was seen on the ZENITH 22s, compressing D/D by c.24bps.
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4. DMO: An Issuance Calendar Amid Many Uncertainties
5. A Slow Start into The New Week as Market Activities
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