The Bears Took a Pause, Dampening Yields Slightly In the Fixed Income Space

Proshare

Thursday, August 06, 2020 / 05:52 PM / By Zedcrest Capital / Header Image Credit: Bankrate


Proshare Nigeria Pvt. Ltd.


FGN Bonds

The FGN bond market opened too wide but better bided across the curve. The auction papers say most of the market joy especially on the 2026s which started at 7.90/6.50 at the early hours but closed with most of its trades settling around 7% levels.

At the tail of the curve, the 2035s and 2050 weren't left out gaining few tractions as bids were able to match the offers successfully at mid-9% and 10% levels for most of the transactions sealed. As such, yields compressed across the curve by an average of c.32bps compared to yesterday's level.

Tomorrow, we expect trading activities to remain at this pace, as market participants continue to select only bonds offered slightly above the market.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

 

16.39 27-Jan-22

8.24

2.54

1.31

 

12.75 27-Apr-23

8.53

4.09

(0.81)

 

14.20 14-Mar-24

8.90

3.96

(0.01)

 

13.53 23-Mar-25

8.95

4.76

(0.25)

 

12.50 22-Jan-26

7.71

5.42

(1.59)

 

16.29 17-Mar-27

9.62

6.99

(0.36)

 

13.98 23-Feb-28

10.04

7.19

(0.08)

 

14.55 26-Apr-29

9.42

8.08

0.00

 

12.15 18-Jul-34

10.57

8.65

0.00

 

12.40 18-Mar-36

10.64

8.82

(0.03)

 

16.2499 18-Apr-37

10.72

9.84

0.05

 

14.80 26-Apr-49

10.56

10.00

0.16

 

 

Treasury Bills

The OMO bills space stayed quiet as there was major no news to spur active market action. We saw few bids and offers at the tail of the curve which was difficult to match as they stood widely apart. Some activity picked up as the session wore on, notably on the 25 May 2021 paper which ended trading in the high 4.00% range. We also noted a few interests in August- September bills as offers hovered around 2.45%-2.50% range for most of the trading session. However, yields compressed by c.50bps across the OMO curve.

At the NTB space, the market calmness persisted although we saw few retail demands for short-end bills albeit no trades as offers stood far at 1.40% level for December maturities.

For tomorrow, the market is expected to remain calm, with few order-driven requests on selected papers.

  

Benchmark OMO Bills

Description

Bid (%)

Offer (%)

Day Change (%)

NGOMO 8/13/2020

4.00

0.01

(1.00)

NGOMO 9/3/2020

4.50

0.01

(0.50)

NGOMO 10/1/2020

4.50

0.01

(0.50)

NGOMO 11/03/2020

5.00

0.01

(0.50)

NGOMO 12/01/2020

5.00

0.01

(0.50)

NGOMO 02/02/2021

6.00

1.00

0.00

NGOMOB 0 03/02/21

6.00

1.00

(0.50)

NGOMOB 0 03/02/21

6.00

1.00

(0.50)

NGOMOB 0 05/11/21

6.00

1.00

(0.50)

 

Benchmark NTBills

Description

Bid (%)

Offer (%)

Day Change (%)

NIGTB 10/1/2020

2.50

0.01

0.00

NIGTB 11/12/2020

3.00

0.01

0.00

NIGTB 01/14/2021

3.00

0.10

0.00

NIGTB 02/11/2021

3.50

0.10

0.00

NIGTB 04/29/2021

3.50

0.10

0.00

NIGTB 05/13/21

4.00

0.10

0.00

NIGTB 06/10/21

4.00

0.10

0.00

 

Money Markets

With low funding pressures today and the interbank market remaining boosted with a fair amount of liquidity, we saw OBB and OVN rates drop further D/D to close at 8.00% and 8.64% respectively.

For tomorrow, the market isn't expecting any uptick in rates as funding pressure will remain low in the interbank market.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.00

8.50

Overnight (O/N)

8.64

9.33

 

FX Market

The Naira traded on a solemn note in today's trading session, as the IEFX closing rate posted at 0.96% gain in value to close at N385.50/$ amidst very low traded volumes.

However, all other market segments remained unchanged with the cash and transfer market closing the day at N472/$ and N473/$ respectively.


FX Market

Current (N/$)

Previous ( N/$)

CBN Spot

381.00

381.00

CBN SMIS

380.69

380.69

I&E FX Window

385.50

389.25

Cash Market

472.00

472.00

Transfer Market

473.00

473.00

 

Eurobonds

At NGERIA Sovereign space, we saw the market rally slow across the bond papers although with slightly better bids compared to yesterday at the belly and the tail of the curve. The 2038s and 2047s maturities were the major winners as yields dropped by (-11bps) and (-0.05bps) respectively. By and large, yields compressed slightly by an average of c.4bps across the sovereign curve. 

The NGERIA Corps tickers on the other hand had a drab session although yields stayed strengthened on most of the tracked papers, except for the UBA 2022s which closed flat D/D.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


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