System Liquidity Touches A Trillion, Prompting An OMO Auction By The CBN

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Friday, April 24, 2020 / 9:29 AM / By Zedcrest Capital / Header Image Credit: Pixabay

 

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FGN Bonds 

Yields in the Bond Market opened the trade session lower, off the back a bullish FGN Bond auction. Demand was evident across the benchmark curve, mostly notably at the head (2023s) and belly (2027s) of the curve. The auction bonds (2035s and 2050s) also saw some action in the session, with trades happening around the auction stop rates. Yields consequently dropped by c.57bps on the average across the benchmark curve.

 

We expect to close the week on a similar note, with demand persistent on short- and mid-tenor securities as market participants continue to stay wary of duration during the global uncertainties.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50

15-Jul-21

5.85

5.05

(0.86)

16.39

27-Jan-22

7.10

4.97

(0.88)

12.75

27-Apr-23

9.25

8.36

(0.43)

14.20

14-Mar-24

9.00

8.36

(0.49)

13.53

23-Mar-25

9.86

8.91

(0.99)

12.50

22-Jan-26

9.93

9.01

(1.83)

16.29

17-Mar-27

11.75

11.35

(0.19)

13.98

23-Feb-28

11.78

11.33

(0.28)

14.55

26-Apr-29

11.80

11.31

(0.34)

12.15

18-Jul-34

12.14

11.56

(0.23)

12.40

18-Mar-36

12.25

11.73

(0.15)

16.2499 18-Apr-37

12.06

11.51

(0.34)

14.80

26-Apr-49

12.60

12.39

(0.34)

 

 

Treasury Bills 

The recent bullish trend in the OMO Market slowed today, as the Central Bank of Nigeria announced an auction to open the trade sessions. While concerns of renewed supply caused rates to inch up slightly, trades however crossed in the mid-10% range for the long-dated maturities. Rates closed the session c.36bps higher on the average across the benchmark OMO curve.

 

At the OMO auction, the CBN issued a total of N122.65Bn out of N100Bn offered across three tenors. Stop rates closed at 11.50%, 11.54%, and 12.71% for the 89-, 180-, and 341-day maturities respectively. Surprisingly, the Apex bank opted to prorate the volumes on the 341-day tenor, selling only N80.78bn out of a possible N226.16Bn.

 

We expect the week to close on a bullish note, as the market remains liquid and local banks look to fill lost auction bids in the secondary market.

 

 

                 OMO Auction Results - Apr. 23, 2020

 

Tenor

Rate (%)

Offer (N'bn)

Sub (N'bn)

Sale (N'bn)

89-day

11.50

10.00

64.10

20.37

 

 

 

 

 

180-day

11.54

10.00

33.50

11.50

 

 

 

 

 

341-day

12.71

80.00

226.16

80.78

 

 

 

 

 

 




                               Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

 

 

 

 

NGOM 5/14/2020

10.00

7.50

1.00

NGOM 6/4/2020

10.50

6.00

1.50

NGOM 7/2/2020

10.00

7.00

0.75

NGOM 8/13/2020

10.00

7.00

0.50

NGOM 9/3/2020

10.25

8.50

0.00

NGOM 10/1/2020

10.00

8.00

0.00

NGOM 11/03/2020

10.50

8.00

0.00

NGOM 12/01/2020

10.00

8.50

0.00

NGOM 01/05/2021

11.00

10.00

0.00

NGOM 02/02/2021

11.00

10.40

0.10

NGOM 03/02/21

11.00

10.70

0.10

 



Benchmark NTBills

 

Description

Bid (%)

Offer (%)

Day Change (%)

 

 

 

 

NIGTB 2-Jul-20

2.25

2.00

0.00

NIGTB 1-Oct-20

3.20

2.00

0.00

NIGTB 12-Nov-20

3.50

2.00

0.00

NIGTB 14-Jan-21

3.75

2.00

0.00

NIGTB 11-Feb-21

3.90

2.00

0.00

 

Money Markets 

System liquidity opened with a whopping c.N1.01Trn positive, following OMO maturities of N226Bn. Money Market Rates remained unfazed by an OMO auction, as OBB and OVN rates closed the day at 1.88% and 2.00% respectively.


Proshare Nigeria Pvt. Ltd.

 

Following the recent one-auction-per-week strategy employed, it appears the CBN is comfortable with the current levels of system liquidity. We expect rates to close the week stable in the low single-digit range, barring any surprise funding pressures on market participants.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

1.88

1.80

 

FX Market 

At the Interbank segment, the Naira/USD and SMIS rate were unchanged to closed at N361.00/$ and N380.69/$ respectively. At the I&E FX window, the closing rate for the Naira also remained stable to close at N383.00/$.

 

At the parallel market segment, the cash and transfer rates both remained unchanged to close N416.00/$ and N435.00/$ respectively.

 

FX Market

 

Current (N/$)

Previous ( N/$)

CBN Spot

361.00

361.00

CBN SMIS

380.69

380.69

I&E FX Window

383.00

383.00

Cash Market

416.00

416.00

Transfer Market

435.00

435.00

 

Eurobonds 

The NGERIA Sovereigns recovered from yesterday's losses as global oil prices continue to inch higher. Offers were lifted all day, as yields compressed by c.72bps on the average across the sovereign curve. The biggest gainers on the day in yield terms were the 2021s and 2025s, as yields on both papers dropped by c.105bps and c.117bps respectively.


We also noted some demand for the NGERIA Corps papers, with the FIDBAN 2022s leading the pack of gainers on the day.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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