OMO Auction: Cash Shortages in the Money Market Deters OMO T-Bills Auction Buyers

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Friday, January 29, 2021 / 8:22AM / NSE / Header Image Credit: iStock


Proshare Nigeria Pvt. Ltd.


FGN Bonds

Today, the FGN bond market retained its bearish stance as sellers continue to overwhelm the market with offers across the curve. We witnessed some EOM short-covering and client demand on selected papers: 2029s,2034s,2037s, and 2049s bonds, which we expect to calm the selling pressure. However, the reverse was the case as yields remained pressured till the end of the trading session while the market struggled to find a support level.

 

We expect the market to close the week on a bearish note barring any renewed buying interest from local asset managers and Pension Funds.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

12.75 27-Apr-23

7.31

5.30

0.88

 

14.20 14-Mar-24

7.59

5.99

0.63

 

13.53 23-Mar-25

7.52

6.05

0.48

 

12.50 22-Jan-26

8.72

6.99

0.68

 

16.29 17-Mar-27

8.77

8.00

0.16

 

13.98 23-Feb-28

9.10

8.12

0.00

 

14.55 26-Apr-29

9.40

8.54

(0.16)

 

12.15 18-Jul-34

11.00

10.21

0.27

 

12.50 27-Mar-35

11.08

10.20

0.00

 

12.40 18-Mar-36

11.02

10.17

0.00

 

16.2499 18-Apr-37

10.92

10.15

(0.01)

 

9.80 24-Jul-45

10.98

10.13

0.00

 

14.80 26-Apr-49

11.07

10.39

0.00

 

12.98 27-Mar-50

11.01

10.35

0.00

 

 


Treasury Bills

The T-bills market traded on a muted note as participants shifted their focus to the OMO auction floated by the CBN today. Yields gapped higher in the secondary market in anticipation of a possible bearish shift in OMO stop rates, while buyers constrained by low cash remained on the side-lines.

 

At the OMO auction, the CBN issued a total of N150Bn while maintaining the stop rates across the three tenors on offer. Volume bided at today's auction also declined significantly due to cash shortage in the Money Markets, which excluded most local banks from the auction, hence the low bid-to-cover ratio of 1.35X 1year paper.

 

We expect the market to close the week on a bearish note as market participants, especially offshore investors, seek to profit on their OMO winnings closing the month.

 

OMO AUCTION RESULT

OMO - 28 Jan 2021

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

89 days

1.5100

20.00

29.50

20.00

1.5100

0.0000

180 days

4.3400

20.00

17.00

15.00

4.3400

0.0000

362 days

5.7400

110.00

148.29

110.00

5.7400

0.0000

 

 

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 03/02/21

5.00

0.03

0.00

NGOMOB 0 05/11/21

5.50

0.03

0.00

NGOMOB 0 06/08/21

5.50

0.04

0.00

NGOMOB 0 08/10/21

6.00

0.04

0.00

NGOMOB 0 09/07/21

6.50

0.04

0.00

NGOMOB 0 10/19/21

6.50

0.05

0.00

NGOMOB 0 11/02/21

6.50

0.05

0.00

NGOMOB 0 12/07/21

7.00

0.05

0.00

NGOMOB 0 01/13//22

7.00

0.05

0.00

 

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 02/11/21

5.00

0.03

0.00

NIGTB 0 03/11/21

5.00

0.03

0.00

NIGTB 0 04/29/21

5.00

0.03

0.00

NIGTB 0 05/13/21

5.50

0.04

0.00

NIGTB 0 06/10/21

6.00

0.04

0.00

NIGTB 0 07/01/21

6.00

0.04

0.00

NIGTB 0 08/26/21

6.00

0.04

0.00

NIGTB 0 09/09/21

6.50

0.04

0.00

NIGTB 0 10/14/21

6.50

0.04

0.00

NIGTB  0 11/11/21

6.75

0.05

0.00

NIGTB  0 01/11/22

7.00

0.05

0.00

NIGTB 0 02/11/21

5.00

0.03

0.00

NIGTB 0 03/11/21

5.00

0.03

0.00

 


Proshare Nigeria Pvt. Ltd. 


Money Markets

Interest rates trended northwards by about c.500bps today as naira dealers scrambled to cover their positions due to OMO T-bills Auction cash provisioning and some FG statutory remittance of over c.200Bn debited from the banking system. Consequently, OBB and Overnight rates closed at 9.00% and 10.00%, respectively, from 5.00% and 5.50% the previous day.

 

We expect funding costs to remain elevated closing the week as system liquidity thins out.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.00

5.00

Overnight (O/N)

10.00

5.50

 

 

 

FX Market

The Naira depreciated marginally at the I&E FX window by N0.08K due to scarcity of funds, with the market staying rooted to the BUY side. Approximately $37.58million changed hands during the trading session as most participants remained buyers within a wide range of N388.00/$1 - 395.00/$1.

 

Other FX market segments remained unchanged except for the FX cash market, which appreciated by N1.50k due to the increase in FX supply from BDCs weekly collections from the CBN. 

 

FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

394.33

394.25

Cash Market

475.00

476.50

Transfer Market

489.00

489.00

 

 

Eurobonds 

The NIGERIA Corps saw some selling actions today as the bears' sort to recoup some gains from yesterday's rally by bettering their offers except for the SEPLLN 2023s bonds, which stood out amongst the tracked papers, strengthening by -c.41bps D/D due to the scarcity of the bond paper.

 

Likened to the corporate bonds, the NIGERIA Sovereigns remain firmly bearish throughout the session as profit-takers' actions seem not to persist, causing yields to expand by c.6bps across the sovereign curve.


Proshare Nigeria Pvt. Ltd. 



Proshare Nigeria Pvt. Ltd.



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Proshare Nigeria Pvt. Ltd. 


Proshare Nigeria Pvt. Ltd.

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