OMO Auction: CBN Issues N170bn Worth of OMO T-Bills, Highest Issuance in 9-Months

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Friday, January 22, 2021 / 9:24 AM / By Zedcrest Capital / Header Image Credit: Dreamstime


Proshare Nigeria Pvt. Ltd.


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.


Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd. 



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Proshare Nigeria Pvt. Ltd. 


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