Rates Close Lower At The Treasury Bills Primary Auction, Demand For OMO Lingers

Proshare

Wednesday, April 01, 2020 / 09:30 PM / Zedcrest Capital / Header Image Credit: Missybanker

 

Below are highlights of trading activities in the fixed income and forex market on April 01, 2020 

 

FGN Bonds

The Bond Market traded on a tepid note, with a bullish bias. We continued to see demand, mostly at the belly of the curve, with the 2028s and 2029s as investor favorites. Demand for the 2049s bond also pushed yields down by 14bps on that maturity. Yields compressed by an average of c.3bps across the benchmark bond curve.


We expect investor demand to persist in tomorrow's session as they look to reinvest funds from OMO maturities (c.N200bn) expected.


 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

7.80

5.33

(0.01)

 

16.39 27-Jan-22

9.05

6.32

(0.12)

 

12.75 27-Apr-23

11.55

10.22

0.00

 

14.20 14-Mar-24

11.61

10.85

0.00

 

13.53 23-Mar-25

12.38

11.38

(0.04)

 

12.50 22-Jan-26

12.55

12.24

(0.01)

 

16.29 17-Mar-27

12.75

12.35

0.00

 

13.98 23-Feb-28

12.94

12.55

0.00

 

14.55 26-Apr-29

12.88

12.48

(0.01)

 

12.15 18-Jul-34

13.08

12.51

0.00

 

12.40 18-Mar-36

13.00

12.53

0.00

 

16.2499 18-Apr-37

13.13

12.64

0.00

 

14.80 26-Apr-49

13.04

12.76

(0.14)

 

 


Treasury Bills

Buoyant system liquidity continued to support the current bullish trend in the Treasury Bills market. Demand was evident across the OMO curve as low expectations for supply by the CBN in the interim drove banks to pick up bills in the secondary market. Yields compressed further by an average of c.37bps across the benchmark OMO curve.


At the Primary Market Auction, the DMO successfully issued N95.68bn across the three tenors on offer amidst healthy demand. The DMO dropped its rates by an average of c.20bps, stopping at 2.20%, 3.20% and 4.30% for the 91-, 182- and 364-day tenors.


With OMO maturities of c.N200bn expected to hit the system tomorrow, we expect demand for OMO bills to linger in tomorrow's trading session.


Primary Market Auction Results

NTB  - 01 April 2020

Tenor

Offer (N'bn)

Subscription (N'bn)

Sale (N'bn)

Stop Rate (%)

91 days

10.00

20.71

10.00

2.20

182 days

17.60

28.82

17.60

3.20

364 days

68.08

111.86

68.08

4.30

 

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 5/14/2020

12.50

11.00

(0.50)

NGOMO 6/4/2020

12.25

11.00

(0.25)

NGOMO 7/2/2020

15.00

6.00

0.00

NGOMO 8/13/2020

12.85

11.00

(0.15)

NGOMO 9/3/2020

12.75

12.00

(0.05)

NGOMO 10/1/2020

13.10

13.00

(0.90)

NGOMO 11/03/2020

13.55

12.00

(0.45)

NGOMO 12/01/2020

12.75

12.50

(0.10)

NGOMO 01/05/2021

13.10

12.80

(0.85)

NGOMO 02/02/2021

13.50

13.00

(0.45)

NGOMOB 0 03/02/21

13.50

13.10

(0.35)



Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Jul-20

6.00

1.00

0.50

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

Interbank Money Market rates continued to drop today, as the system liquidity improved by c.14% to open at c.N470bn positive. Reduced funding pressures pushed down OBB and OVN rates by c.340bps on the average, to close at 5.50% and 6.08% respectively.


 

There remains an outside chance for the CBN to issue an OMO auction to manage excess liquidity, but we do not see this to severely impact Money Market rates as appetite for primary market issues remain low for banks due to attendant CRR impact.


 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

5.50

8.50

Overnight (O/N)

6.08

9.83

 

FX Market

Activity in the I&E window took a hit, as traded volumes today were down 68% from the day before. The Naira remained unchanged across all three trading segments (I&E Closing, CBN Spot and SMIS rates).


At the parallel market, a lack of supply continued to weaken the Naira, as sellers dictateted the tune. Cash and Transfer rates depreciated by an average of N2.50k to close at N415.00/$ and N430.00/$ respectively. This trend is expected to continue barring any intervention by the CBN.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

358.51

358.51

I&E FX Window

385.55

385.55

Cash Market

415.00

412.00

Transfer Market

430.00

428.00

 

Eurobond

The NGERIA Sovereign tickers continued to weaken for another consecutive session, even as Brent oil prices slump by another 4.57% D/D. Yields expanded by an average of c.50bps across the sovereign curve in a session with less traded volumes than usual, especially from local investors. As the global oil glut continues to linger, we hold a negative outlook for sovereign debt in the short- to near-term.


The NGERIA Corps tickers are currently feeling no love, especially the banks, in light of the perceived exposure to the global oil price slump and the Covid-19 pandemic. We continued to see little interest in the tracked papers in today's trade session, and this is expected to be sustained in the interim.


 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


 

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