OMO Yields Drop Further in the T-Bills Market as the Long-dated Maturities Trade below 12% Levels

Proshare

Friday, February 21, 2020 / 07:26 PM / Zedcrest Capital / Header Image Credit: Biz Watch Nigeria


Below are highlights of trading activities in the fixed income and forex market on February 21, 2020

FGN Bonds

The Bond Market maintained its bullish demeanor, with decent demand but a shortage of offers to match, as market makers' held-off in anticipation of yields plunging further. The mid- to long-end had the most activities, especially the 2049s, as market bids continued to drop going into the last trading day of the week. Yields compressed by c.5bps across the benchmark bond curve.


With over c.950bn of OMO maturities to come in next week, we expect significant demand, as investors' scramble to lock-in excess funds at attractive yields.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

7.60

6.81

(0.01)

 

16.39 27-Jan-22

7.56

6.79

(0.01)

 

12.75 27-Apr-23

8.35

8.01

0.00

 

14.20 14-Mar-24

9.22

8.31

0.00

 

13.53 23-Mar-25

9.57

8.52

(0.14)

 

12.50 22-Jan-26

9.98

9.46

(0.11)

 

16.29 17-Mar-27

10.56

10.18

(0.17)

 

13.98 23-Feb-28

10.59

10.30

(0.08)

 

12.15 18-Jul-34

11.02

10.85

0.00

 

12.40 18-Mar-36

11.05

10.93

(0.07)

 

16.2499 18-Apr-37

11.07

10.95

(0.04)

 

14.80 26-Apr-49

12.06

12.03

(0.01)

 

 

Treasury Bills

The Treasury Bills market ended the week on bullish sentiment, as yields continue to plunge across the OMO curve. The 1-year (16-Feb) issued at yesterday's OMO auction had the most axes, with supply mostly from offshore investors, as yields dipped by c.130bps from the stop rate (13.02%). Yields compressed by c.37bps across the benchmark OMO curve.


The NTB side remained quiet, with little trades consummated at retail-size at the mid-end. Yields remained unchanged D/D across the benchmark NTB curve.


We expect to see more demand on OMO maturities next week, as local market players' look to reinvest incoming OMO maturities of c.N950bn. We anticipate a numb session on the NTB side, as local investors' look towards the Primary Market Auction.

  

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

12.00

10.00

0.00

NGOMO 2-Apr-20

10.15

8.00

(1.85)

NGOMO 14-May-20

12.00

9.50

0.00

NGOMO 4-Jun-20

12.00

10.00

0.00

NGOMO 2-Jul-20

12.00

10.00

0.00

NGOMO 13-Aug-20

12.00

11.10

0.00

NGOMO 3-Sep-20

12.00

10.50

(0.40)

NGOMO 1-Oct-20

12.00

11.00

(0.50)

NGOMO 3-Nov-20

12.00

11.30

(0.40)

NGOMO 1-Dec-20

11.80

11.30

(0.60)

NGOMO 5-Jan-21

11.80

11.20

(0.30)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

7.00

1.00

0.00

NIGTB 2-Jul-20

7.00

2.00

0.00

NIGTB 1-Oct-20

7.00

2.00

0.00

NIGTB 14-Jan-21

7.00

2.00

0.00

                                                                          


Money Market

Interbank rates dipped by c.25bps, reeling from yesterday's OMO maturities inflows. OBB and OVN rates closed the week lower at 3.00% and 3.83% respectively, as system liquidity opened the day with c.N478.52bn positive

 

We expect rates to remain depressed going into next week, as OMO maturities of c.950bn will likely douse the effect of FX Wholesale and Retail Debits on system liquidity. 

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

3.00

3.33

Overnight (O/N)

3.83

4.08

 


FX Market

At the Interbank, the Naira/USD spot rate and SMIS rate remained stable at N307.00/$ and N358.51/$ respectively. The Naira further appreciated at the I&E FX window, losing 12k to close the week at N364.26/$.

 

The parallel market, the cash rate and the transfer rate remained unchanged to close at N358.30/$ and N365.00/$ respectively. 


Proshare Nigeria Pvt. Ltd.


Eurobond

The NGERIA Sovereign tickers ended the week with a bearish outlook. Yields retraced across the sovereign curve, as market players continue to trade oil price movement. Yields expanded by c.4bps across the sovereign yield curve, with crude oil prices closing lower at $57.43bp (at the time of this report).

                    

The NGERIA Corps tickers traded on a quiet note, halting the bullish trend seen for most part of the week. Yields on the ACCESS 2021s recorded the only D/D movement (-1bps) among most tracked papers.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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