The Bears Reigned Unhinged in the Fixed Income Market

Proshare

Saturday, March 14, 2020 / 04:00 PM / By Zedcrest Capital Header Image Credit: MoneyMarket


Below are highlights of trading activities in the fixed income and forex market on March 13, 2020

 

FGN Bonds

The Bonds Market ended the week on a bearish note, as better offers were seen across the curve. The mid- to long-end (2049s) of the curve continued to garner the most traction, as market players continue to reduce their exposure on debt instruments. Yields expanded by an average of c.39bps across the benchmark bond curve.  

We expect a quiet market start next week, as market players look to the outcome of the inflation report for February 2020.

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

14.50 15-Jul-21

9.56

6.95

0.77

 

16.39 27-Jan-22

13.85

6.53

0.00

 

12.75 27-Apr-23

13.96

9.52

0.01

 

14.20 14-Mar-24

14.03

10.16

0.00

 

13.53 23-Mar-25

13.95

11.24

0.00

 

12.50 22-Jan-26

14.57

12.13

0.60

 

16.29 17-Mar-27

14.41

13.60

0.45

 

13.98 23-Feb-28

14.41

13.30

0.44

 

12.15 18-Jul-34

14.60

12.50

0.84

 

12.40 18-Mar-36

14.87

12.29

0.87

 

16.2499 18-Apr-37

14.69

12.26

0.69

 

14.80 26-Apr-49

14.31

12.06

0.25

 

 

 

Treasury Bills

The bears reigned in the Treasury Bills Market, as yields continued to spike across the OMO curve. As usual, Offshore Investors remain the main drivers of the bearish trend noticed in recent days, as they exit long positions in droves. The long-end was the main focus of the improved offers (Dec-20 to Feb-21), but no bids to match, as the spread between market bid/offer widened by c.400bps. We also saw some supply from local banks, as the sourced for liquidity to cushion the effect of CRR Debit. Yields further expand by an average of c.97bps across the benchmark OMO curve.


Similarly, The NTB side traded on a bearish note, after days of bullish behavior, as market offers were unattractive for local investors. Yields expanded by an average of c.49bps across the benchmark NTB curve.


We expect the bearish sentiment to continue into next week, as Foreign Portfolio Investors trim down on government securities. We also expect some slight recovery, as OMO maturities of c.N300bn flows into the system.

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 19-Mar-20

18.50

16.50

1.00

NGOMO 2-Apr-20

18.50

16.00

1.15

NGOMO 14-May-20

16.50

15.00

(1.00)

NGOMO 4-Jun-20

18.50

15.50

1.00

NGOMO 2-Jul-20

18.50

13.00

1.00

NGOMO 13-Aug-20

18.50

13.00

1.00

NGOMO 3-Sep-20

18.50

13.00

1.00

NGOMO 1-Oct-20

18.50

13.00

1.00

NGOMO 3-Nov-20

18.50

13.00

1.50

NGOMO 1-Dec-20

18.50

15.50

1.50

NGOMO 5-Jan-21

18.50

13.00

1.50

NGOMO 02-Feb-21

18.00

13.00

1.00

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 2-Apr-20

4.00

1.00

1.00

NIGTB 2-Jul-20

4.50

1.00

0.50

NIGTB 1-Oct-20

5.00

2.00

0.50

NIGTB 12-Nov-20

5.25

2.00

0.25

NIGTB 14-Jan-21

5.70

2.00

0.20

NIGTB 11-Feb-21

6.00

2.50

0.50

 

                                                                      


Money Market

Interbank rates spiked by c.600bps, as a combination of CRR Debit and FX Retail Debit fueled the increment. OBB and OVN rates closed higher to end the week at 9.17% and 10.08% respectively.



We expect rates to inch up next week Monday, as banks make provision for FX Wholesale Debit. We, however, anticipate rates to slightly moderate at the tail-end of next week, as OMO maturities of c.300bn positively impacts system liquidity.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

9.17

3.29

Overnight (O/N)

10.08

4.00

 

FX Market

At the Interbank, the Naira/USD spot and SMIS rate remained unchanged at N306.95/$ and N358.51/$. At the I&E FX window, the Naira remained unchanged at N374.00/$ to end the week.


At the parallel market, cash rates appreciated by N7 to close at N370.00/$, while the transfer rate depreciated further by N8 to close at N395.00/$.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

306.95

306.95

CBN SMIS

358.51

358.51

I&E FX Window

374.00

374.00

Cash Market

373.00

380.00

Transfer Market

395.00

387.00

 

Eurobond

The NGERIA Sovereign tickers traded on a bullish note, as we saw improved bids across the sovereign curve. Despite, depressed oil prices and wide-spread Coronavirus pandemic, we saw some pullback mainly from local investors, as they looked to capitalize of high yields.. Yields dropped by an average of c.22bps across the benchmark sovereign curve.


The NGERIA Corps tickers ended the week on a bullish note, as yields on the ACCESS 2021s and SEPLLN 2023s strengthened by c.1bp and c.9bps respectively, 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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