| Bonds & Fixed Income |    909 VIEWS  |
| Bonds & Fixed Income | |
| 909 VIEWS | |
 | |
| PROSHARE | |
| PROSHARE | |
Sunday, May 10, 2020 / 8:10 AM / By Zedcrest Capital / Header Image Credit: ilearnlot
Yields in the Bond
market raced up opening the week following insights from the Director-General
of the DMO over the weekend about the office's revised borrowing plans amid the
COVID-19 pandemic. Market participants positioned for the expected supply of
bonds as the DMO's figure for local borrowing for 2020 (estimated at N2Trn) was
higher than initially expected. Bids remained shy across the benchmark curve
for most of the session, except for 2027s and 2049s which remained well bided
by locals. Average yields expanded by c.30bps across the benchmark curve.
Market
participants will look to price-in the expected supply of bonds and we expect the
market to remain touchy in the interim, pending further guidance from the DMO
in the form of a revised borrowing calendar for the quarter.
|
Benchmark FGN Bonds |
||||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
|
14.50 15-Jul-21 |
8.10 |
5.00 |
0.85 |
|
|
16.39 27-Jan-22 |
9.24 |
5.43 |
0.58 |
|
|
12.75 27-Apr-23 |
10.77 |
8.46 |
0.78 |
|
|
14.20 14-Mar-24 |
10.62 |
8.45 |
0.59 |
|
|
13.53 23-Mar-25 |
9.95 |
8.50 |
0.12 |
|
|
12.50 22-Jan-26 |
10.70 |
10.00 |
0.12 |
|
|
16.29 17-Mar-27 |
11.26 |
10.83 |
(0.06) |
|
|
13.98 23-Feb-28 |
11.32 |
10.70 |
0.09 |
|
|
14.55 26-Apr-29 |
11.96 |
10.94 |
0.34 |
|
|
12.15 18-Jul-34 |
11.99 |
11.22 |
0.29 |
|
|
12.40 18-Mar-36 |
11.97 |
11.33 |
0.14 |
|
|
16.2499 18-Apr-37 |
11.94 |
11.25 |
0.11 |
|
|
14.80 26-Apr-49 |
12.70 |
12.55 |
(0.01) |
|
Treasury Bills
The Treasury Bills Market started
the week on a more positive note, as we noted improved demand on the
short-dated OMO maturities mostly from off-shore portfolio investors waiting on
the dollar supply promised by the CBN. Offers remained scanty on the day,
causing spreads to expand as liquidity on the papers remained poor.
The demand for retail-size on
NTBs remained in today's session, pushing rates down by c.66bps on the average
across the benchmark NTB curve.
We expect the market to remain
scantily traded as participants look toward supply from the CBN as OMO
maturities of c.N297bn hit the system later in the week.
|
Benchmark OMO Bills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
NGOM 5/14/2020 |
11.00 |
5.00 |
1.25 |
|
NGOM 6/4/2020 |
10.00 |
5.00 |
0.00 |
|
NGOM 7/2/2020 |
10.00 |
5.00 |
1.00 |
|
NGOM 8/13/2020 |
10.00 |
6.50 |
(0.50) |
|
NGOM 9/3/2020 |
11.25 |
7.00 |
0.75 |
|
NGOM 10/1/2020 |
11.50 |
7.50 |
1.00 |
|
NGOM 11/03/2020 |
11.50 |
4.00 |
1.00 |
|
NGOM 12/01/2020 |
11.75 |
8.00 |
1.25 |
|
NGOM 01/05/2021 |
11.00 |
10.00 |
0.00 |
|
NGOM 02/02/2021 |
12.00 |
9.00 |
1.00 |
|
NGOM 03/02/2021 |
12.00 |
9.00 |
1.00 |
|
Benchmark NTBills |
|||
|
Description |
Bid (%) |
Offer (%) |
Day Change (%) |
|
NIGTB 2-Jul-20 |
2.50 |
0.50 |
(1.50) |
|
NIGTB 1-Oct-20 |
3.00 |
1.00 |
(1.00) |
|
NIGTB 12-Nov-20 |
3.50 |
1.00 |
(0.50) |
|
NIGTB 14-Jan-21 |
3.70 |
1.00 |
(0.30) |
|
NIGTB 11-Feb-21 |
4.00 |
1.00 |
0.00 |
Money Markets
Money Market
rates started the week slightly higher, inching close to 10.00% as system
liquidity remained relatively tight. The OBB and OVN rates closed the day lower
at 8.50% and 9.63%, as system liquidity is estimated to have closed at c.N115bn
positive.
We expect rates
to elevate for most of the week amidst tight liquidity, with OMO maturities
c.N297bn expected later in the week.
|
Money Market Rates |
||
|
|
Current (%) |
Previous (%) |
|
Open Buy Back (OBB) |
8.50 |
7.42 |
|
Overnight (O/N) |
9.63 |
8.33 |
FX Market
The Naira
remained fairly stable to open the week. I&E FX window gained N0.3k to
close at N386.94/$, with scarce volumes traded (c.$9.98m only), while the CBN spot
rate and SMIS rates remained stagnant.
The parallel
market also had a quiet day, as supply remains tight and the market lays in
wait for the CBN to make its move in regards to the supply of the greenback.
The cash rate gained N1 to close at N444.00/$ while the transfer rate remained
unchanged at N460.00/$.
|
FX Market |
||
|
Current (N/$) |
Previous ( N/$) |
|
|
CBN Spot |
361.00 |
361.00 |
|
CBN SMIS |
380.69 |
380.69 |
|
I&E FX Window |
386.94 |
387.25 |
|
Cash Market |
444.00 |
445.00 |
|
Transfer Market |
460.00 |
460.00 |
Eurobonds
The
NGERIA Sovereign tickers, along with their Sub-Saharan energy-linked counterparties,
rallied in today's session following the announcement by the kingdom of Saudi
Arabia of its decision to implement additional production cuts of one million
barrels per day. Yields compressed by c.81bps on the average across the
sovereign curve, as the demand for the sovereign papers remains strong for the
second week running.
Similarly,
the NGERIA Corps tickers also posted gains, as we saw demand on almost
all tracked papers with the SEPLLN 2023s the only exception. We expect this
rally to sustain in the interim as the streets continue to see the news out of
Nigeria as positive.
1. Average Yield
Marginally Sheds 4bps WoW on Skeletal Flows to the NT-Bills Space Amid Weak
Sentiments
2. Anchoria Fixed
Income Monitor: FX Pressure Rebound as CBN Weakened Forward Rate
3. Central Bank Of
Nigeria Weakens Naira At The OTC FX Futures Market To Battle Dollar Scarcity
4. Nigerian
Eurobonds Sustain Rally Momentum As Global Oil Prices Continue To Gain
5. United Capital
Plc's Series 1 and Series 2 bonds Issuance Programme Is Coming Soon
6. Naira
Strengthens As Expectations For Improved Supply Calms The Market
7. Weak Sentiments
Dominate the NT-Bills Market Despite Improved System Liquidity
8. CBN Sells N100bn
At OMO Auction To Manage Excess System Liquidity
9. Senate Gives
Approval as DMO Switches Out N850bn External Borrowing Plans For Local Debt
10. FG to Convert
N850bn New External Borrowing in The 2020 Appropriation Act to Domestic
Borrowing
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