Once Again, DMO Raises Rates for The 1-Year Tenor at The T-Bills Primary Auction

Proshare

Thursday, April 15, 2021 / 9:04 AM / By Zedcrest Capital / Header Image Credit: pymnts


Proshare Nigeria Pvt. Ltd.

 

FGN Bonds

Another bearish session ensued in the FGN bond market, as investors shrugged off the positive GDP report released by the NBS earlier in the day. Supply persisted across the benchmark curve, as yields at the belly crossed the 12.00% mark (2027s and 2028s) while the long-end papers (2045s-2050s) changed hands around 13.80% levels. The only bond with some positive movement was the 2029s paper, which traded at 11.80%, much lower than its peers. Yields closed the session by c.30bps higher on the average across the benchmark curve.

 

We expect the bearishness to persist, as the market expects a much higher figure to print in the March 2021 Inflation report due tomorrow morning. With the DMO offer circular for this month's auction out, we expect most of the market action to remain on the auction-offered bonds (2027s, 2035s, and 2045s).

 

Benchmark FGN Bonds

 

Description

Bid (%)

Offer (%)

Day Change (%)

12.75 27-Apr-23

9.15

7.00

1.15

14.20 14-Mar-24

9.55

7.30

0.40

13.53 23-Mar-25

10.20

8.90

0.00

12.50 22-Jan-26

12.05

11.35

0.05

16.29 17-Mar-27

12.20

11.45

0.25

13.98 23-Feb-28

12.35

11.55

0.20

14.55 26-Apr-29

12.55

11.60

(0.10)

12.15 18-Jul-34

13.00

12.50

0.30

12.50 27-Mar-35

13.15

12.55

0.35

12.40 18-Mar-36

13.20

12.60

0.35

16.2499 18-Apr-37

13.25

12.70

0.25

9.80 24-Jul-45

13.90

13.45

0.25

14.80 26-Apr-49

14.00

13.65

0.35

12.98 27-Mar-50

14.00

13.60

0.40

 

Treasury Bills

The activity in the treasury bills space was muted, as the focus remained on the primary market auction floated by the DMO. The long-dated OMO maturities (Jan.-Mar. 2022 papers) continued to inch towards the 9.00% mark, with trades crossing at 8.80% levels. Offers remained for long-dated NTBs for most of the session but met with very little demand as investors expected higher rates at the primary auction.

 

At the primary auction, the DMO took advantage of ample demand to raise 221% of its intended issue, maintaining rates on the 91 and 182-day tenors whilst raising the 1-year rate by 100bps to close at 9.00%.

 

We expect the new supply to spur some market activity as secondary market rates adjust to the uptick in the primary market rates for the 1-year paper.

 

Primary Market Auction Result

NTB  - April 14, 2021

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

Previous Rate (%)

Changes

91 days

2.0000

15.92

15.87

12.46

2.0000

0.0000

182 days

3.5000

4.50

13.94

8.80

3.5000

0.0000

364 days

9.0000

49.14

217.59

132.12

8.0000

1.0000

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMOB 0 05/11/21

10.00

0.05

0.00

NGOMOB 0 06/08/21

10.00

0.05

0.00

NGOMOB 0 08/10/21

10.00

0.10

0.00

NGOMOB 0 09/07/21

9.00

0.10

0.00

NGOMOB 0 10/19/21

10.00

0.10

0.00

NGOMOB 0 11/02/21

10.00

0.20

0.00

NGOMOB 0 12/07/21

11.00

0.20

0.00

NGOMOB 0 01/11/22

11.00

0.20

0.00

NGOMOB 0 02/01/22

12.00

0.20

0.00

NGOMOB 0 03/01/22

12.00

0.20

0.00

 

Benchmark NT-Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 0 04/29/21

7.00

0.05

0.00

NIGTB 0 05/13/21

9.00

0.05

0.00

NIGTB 0 06/10/21

8.00

0.05

0.00

NIGTB 0 07/01/21

9.00

0.05

0.00

NIGTB 0 08/26/21

9.00

0.10

0.00

NIGTB 0 09/09/21

9.00

0.10

0.00

NIGTB 0 10/14/21

9.00

0.10

0.00

NIGTB 0 11/11/21

10.00

0.20

0.00

NIGTB 0 01/13/22

10.00

0.20

0.00

NIGTB 0 02/10/22

11.00

0.20

0.00

 


Money Markets

System liquidity so some slight respite as refunds from previous unmet FX intervention bids saw interbank system liquidity improve to an opening position of N40bn positive. Money market rates consequently moved lower, dropping by c.38bps on the average to close the session at 12.00% and 12.25% for Open Buy-Back (OBB) and Overnight (O/N) rates respectfully.

 

We expect rates to remain elevated to close the week, as debits via CRR, FX Retail, and (likely) OMO auctions are expected to further drain system liquidity.


Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

12.00

12.25

Overnight (O/N)

12.25

12.75

 


FX Market

Supply remained worsened in the I&E FX window, as the traded volume dropped to c.$21million (59% drop D/D). Most participants were bided between N392.00/$ and N422.00/$ with as the closing rate appreciated by c.0.12% D/D. The Naira had a mixed trading session at the parallel markets, with the cash rate appreciating by c.0.52% to close at N480.00/$ while the transfer rate depreciated by 0.19% to close at N495.36/$.


FX Market

Current (N/$)

Previous (N/$)

CBN Spot

379.00

379.00

CBN SMIS

380.69

380.69

I&E FX Window

410.50

411.00

Cash Market

480.00

482.50

Transfer Market

495.36

494.40

 


Eurobonds

The NIGERIA Sovereigns closed today's session unchanged despite the gains seen on global oil prices. Yields on the sovereign curve remained stable day on day, following a relatively quiet session. The NIGERIA Corporates had an uncharacteristically quiet session, with most of the tracked papers also closing flat at the end of the session.


Proshare Nigeria Pvt. Ltd. 


Proshare Nigeria Pvt. Ltd. 



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