Bonds & Fixed Income | |
Bonds & Fixed Income | |
588 VIEWS | |
![]() |
Monday, April 6, 2020 / 7:17 AM / By Zedcrest Capital / Header Image Credit: MChamber
Below are highlights of trading activities in the fixed income and forex market on April 06, 2020
FGN Bonds
The Bond Market
stayed on course with the theme for most the week, a quiet session despite
evident client demand. Bids improved across the benchmark bond curve with
little volumes traded. We noted client
interest extend beyond the 10-year benchmark as some volumes were picked on the
2036 and 2037 maturities. Yields compressed further by an average of c.6bps
across the benchmark bond curve.
We expect the
market to close the week on a bullish note, as investor demand persists along a
recovery in global oil prices.
Benchmark FGN Bonds |
||||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
14.50 15-Jul-21 |
7.75 |
5.28 |
(0.05) |
|
16.39 27-Jan-22 |
9.02 |
6.28 |
(0.03) |
|
12.75 27-Apr-23 |
11.55 |
10.22 |
0.00 |
|
14.20 14-Mar-24 |
11.60 |
11.00 |
(0.01) |
|
13.53 23-Mar-25 |
12.38 |
11.37 |
0.00 |
|
12.50 22-Jan-26 |
12.55 |
12.24 |
0.00 |
|
16.29 17-Mar-27 |
12.74 |
12.35 |
(0.01) |
|
13.98 23-Feb-28 |
12.69 |
12.45 |
(0.25) |
|
14.55 26-Apr-29 |
12.88 |
12.48 |
0.00 |
|
12.15 18-Jul-34 |
13.08 |
12.53 |
0.00 |
|
12.40 18-Mar-36 |
12.92 |
12.54 |
(0.08) |
|
16.2499 18-Apr-37 |
12.88 |
12.58 |
(0.25) |
|
14.80 26-Apr-49 |
12.94 |
12.70 |
(0.10) |
|
Treasury Bills
OMO bills continued to rally in
today's session, supported by buoyant system liquidity levels. Local banks
continued to demand bills across the OMO curve to reinvest OMO maturities for
most of the session, which paused after the CBN announced an OMO auction an
hour before trading close. We noted some resistance for rates below 13.00% on
long-dated maturities, as market players expected higher stop rates at the OMO
auction. Yields compressed further by an average of c.52bps across the benchmark
OMO curve.
The OMO Auction was poorly
demanded, as local and offshore players shied away from the auction, The CBN
was only able to sell N4Bn out of N110bn offered across three tenors, cutting
the stop rate to 12.7999% on the 348-day tenor.
There was some action in the NTB
space, as the newly issued 1-year NTB traded at 3.70% (60bps lower than the auction
stop rate).
We expect the demand of OMO bills
to pick up some steam in the last trading session of the week, with the
long-dated maturities possibly breaking resistance levels to trade sub-13.00%.
The CBN could reattempt another OMO auction to mop up excess liquidity, if so,
we expect a tighter bid range from market participants.
Primary Market Auction Results |
||||
OMO - 02
April 2020 |
||||
Tenor |
Offer (N'bn) |
Subscription (N'bn) |
Sale (N'bn) |
Stop Rate (%) |
75 days |
5.00 |
Nil |
Nil |
No Sale |
166 days |
5.00 |
Nil |
Nil |
No Sale |
348 days |
100.00 |
21.00 |
4.00 |
12.7999 |
Benchmark OMO Bills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NGOMO 5/14/2020 |
12.00 |
9.00 |
(0.50) |
NGOMO 6/4/2020 |
12.00 |
9.00 |
(0.25) |
NGOMO 7/2/2020 |
12.35 |
5.00 |
(2.65) |
NGOMO 8/13/2020 |
12.45 |
11.00 |
(0.40) |
NGOMO 9/3/2020 |
12.50 |
11.50 |
(0.25) |
NGOMO 10/1/2020 |
12.75 |
12.25 |
(0.35) |
NGOMO 11/03/2020 |
12.85 |
12.00 |
(0.70) |
NGOMO 12/01/2020 |
12.85 |
12.50 |
0.10 |
NGOMO 01/05/2021 |
13.05 |
12.75 |
(0.05) |
NGOMO 02/02/2021 |
13.15 |
12.75 |
(0.35) |
NGOMOB 0 03/02/21 |
13.20 |
12.75 |
(0.30) |
Benchmark NTBills |
|||
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
NIGTB 2-Jul-20 |
6.00 |
0.50 |
0.00 |
NIGTB 1-Oct-20 |
6.00 |
1.00 |
0.00 |
NIGTB 12-Nov-20 |
6.00 |
1.00 |
0.00 |
NIGTB 14-Jan-21 |
6.00 |
1.00 |
0.00 |
NIGTB 11-Feb-21 |
6.00 |
1.00 |
0.00 |
Money Market
Money
Market Rates dropped further today following OMO maturities and the CBN's
failure to mop up substantial volumes. OBB and OVN rates declined by c.290bps
on the average, to close at 2.67% and 3.08% respectively, as system liquidity
is expected to close c.N700bn.
The CBN is
expected to attempt a second OMO auction this week to manage excess liquidity, again
we do not expect any major impact to Money Market rates.
Money Market Rates |
||
|
Current (%) |
Previous (%) |
Open Buy Back (OBB) |
2.67 |
5.50 |
Overnight (O/N) |
3.08 |
6.08 |
FX Market
Volumes
continued to dwindle in the I&E FX window, down 59% from the previous day's
session. The Naira appreciated by 0.66% to close at N383.00/$ at the I&E FX
window, while the CBN Spot and SMIS rates remained statics.
The Naira
stabilized a bit at the parallel market, with the Cash rate losing N1.00k to
close at N416.00/$ while the transfer rate remained static at N430.00/$.
FX Market |
||
Current (N/$) |
Previous ( N/$) |
|
CBN Spot |
361.00 |
361.00 |
CBN SMIS |
358.51 |
358.51 |
I&E FX Window |
383.00 |
385.55 |
Cash Market |
416.00 |
415.00 |
Transfer Market |
430.00 |
430.00 |
Eurobond
The
NGERIA Sovereign finally got some reprieve as yields rallied
following a 23% recovery in global oil prices. Oil prices spiked following a
tweet by President Donald Trump suggesting an end-in-sight to the current price
war between Saudi Arabia and Russia, and oil-related ticked followed suit.
Yields compressed by c.45bps on the average across the sovereign curve.
Conversely,
the NGERIA Corps tickers continued to weaken as
investors weigh the negative impact of the COVID-19 pandemic on the performance
on Nigerian companies. The UBANL 2022s were the biggest losers on the day,
weakening by 4bps D/D.
Related News
1.
NSE Lists March 2020 FGN Savings Bond Issue
2.
Now Open - Dangote Cement Plc Bond Offer; April FGN
Savings Bonds Cancelled
3.
Anchoria Fixed Income Monitor: Buoyant System Liquidity
amid COVID-19
4.
NB Launches Series 7 and 8 of Commercial Paper Programme
5.
Dangote Cement Series 1 up to N100bn 5-year Under Its
N300bn Bond Issuance Programme Now Open
6.
OMO Rates Continue To Plummet Amidst Excess System
Liquidity
7.
Rates Close Lower At The Treasury Bills Primary Auction,
Demand For OMO Lingers
8.
COVID-19: DMO Suspends April 2020 FGN Savings Bond Offer
9.
Net CRR Refund Eases Liquidity Crunch, Drives Demand for
OMO Bills
10.
Axxela Funding 1 Plc - Up to N10bn Series 1 Bonds Is Now
Open